For about three years now, analysts have been predicting that the business climate for trucking would be at least a little better a year later. And for about three years, they generally have been wrong. Freight volume remains soft. Pricing stinks. And there is still too much capacity.

Once again, the consensus seems to be that the situation a year from now will be better than it is today, although some analysts are only reluctantly optimistic. There is reason to be wary. A recovery in trucking depends on the balance between supply and demand, and we still have too many trucks chasing too little freight. Both elements – truck capacity and freight demand – seem to be moving gradually in the right direction, but it just isn’t clear how long the road to recovery will be.

“While certainly we’re not where we were a year ago, there’s nothing on the horizon to get excited about,” says Bob Costello, chief economist for the American Trucking Associations. Costello believes that 2010 will be the best year in a couple of years, but those were two very bad years. “I think that the end of the year will be somewhat better than the beginning of the year.”

“It’s going to be an interesting year,” says Eric Starks, president of transportation research firm FTR Associates. “In general, it will be a year of recovery. We will still have a few stops and starts, and it’s clear we won’t see a huge amount of growth.”

Others are even less confident regarding what 2010 holds for the trucking industry one way or the other. “There are a lot of question marks rather than answers for 2010,” says John Larkin, managing director and transportation analyst for investment banking firm Stifel, Nicholaus & Co. Will there be a recovery in 2010? “I don’t think it’s a slam dunk.”

Strengthening demand

Larkin is not optimistic about a near-term rebound primarily because of consumer spending. “Two-thirds of our economy is the consumer,” Larkin notes. “Until 12 to 18 months ago, the consumer was spending everything he had and then some. Consumers assumed that appreciation of their stock portfolios and home values would cover retirement, and now they realize that they can’t count on that.”

Larkin paints an ugly picture. People are saving more. The unemployment rate – if you take into account the people who are underemployed or have stopped looking – has hit about 17 percent. Those with jobs are afraid of losing them. And many companies have asked employees to take a pay cut, unpaid vacations or days off. On top of all of this, businesses are wary of making investments due to fears about the consumer, as well as developments in Washington.

“We have hit a stable depressed level,” Larkin says. “There’s a certain amount of freight that moves around the country just to support life. What makes the trucking industry healthy is all of the durable stuff.”

Although businesses have been watching inventories, dismal sales sent the inventory-to-sales ratio soaring at the end of 2008. Although the ratio dropped to more modest levels in 2009, the glut of inventory relative to sales was one reason that the trucking industry did not lead the economic recovery, says Bob Costello, chief economist for the American Trucking Associations.

There are some factors pointing toward improvement in the economy and freight demand, however. The coming year should see modest growth in freight volumes, predicts Donald Broughton, managing director and senior research analyst for investment banking firm Avondale Partners. He cites several factors pushing higher volumes, including:

•  A weaker dollar that will mean more domestic manufacturing and exports;

•  A greater willingness of banks to lend, but continued low interest rates; and