Despite higher interest rates and a slowing business climate, the economy is still strong, and there’s going to be plenty of freight for trucking companies, an industry economist told attendees of the CCJ Spring Symposium, sponsored by Randall-Reilly Publishing.
“We are going to see a deceleration of the U.S. economy through the year,” Bob Costello, chief economist for the American Trucking Associations, told attendees Tuesday, June 6 in Tuscaloosa, Ala. “By end of the year, we’ll have a under 3 percent growth rate. But that’s not such a bad thing. As long as we’re growing, that’s not bad. It’s sustainable.”
The last three quarters should be better for trucking companies than the first quarter of 2006, when truck tonnage fell, Costello said. That slowdown was related to a $6 billion inventory correction by a major retailer and the weight of goods being transported in the economy, he said. Carrier revenues and freight volume, meaning the number of loads being hauled, were not affected as much; and while long-haul trucking fell 9 percent in the first quarter, flatbed and refrigerated applications actually grew, according to Costello.
Industry challenges include driver availability, capacity and fuel prices. “Our industry will spend nearly $100 billion on fuel this year,” he said. Costello also is concerned that the Federal Reserve is interested in raising interest rates further to slow inflation; he believes those increases could cool the economy. “I would much prefer the Federal Reserve would take a break and back off raising rates,” Costello said.
There are good signs in the economy as well: Business investment and manufacturing are performing robustly, and that should help trucking, Costello said. “The first quarter was a bit of a surprise. Does that mean we should panic? No. The economy is certainly not going to stop by end of year.”