Economist: Housing slowdown hurts flatbed segment

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The slowing economy fueled by a declining housing market is being felt in some segments of the trucking industry, but brighter days are predicted. Bob Costello, chief economist of the American Trucking Associations, told attendees of ATA’s annual Management Conference and Exhibition in Dallas that “freight has been weak this fall, but in the long run, trucking looks good.”

Costello was part of the “All Eyes on the Economy” panel on Monday, Oct. 30, hosted by David Faber, CNBC anchor and author of The Faber Report. “Freight tonnage has been flat this year,” Costello said. “The flatbed segment had been the star before the housing decline, but now it is not as strong, and part of that is due to the slowdown of construction materials for new housing starts.”

Costello said the strongest segment of the trucking industry has been reefers, with less-than-truckload showing positive gains, but overall long-haul is down 1 percent for the year. Revenues remain strong, even though productivity has failed to recover since the market downturn five years ago.

Nariman Behravesh, chief economist of Global Insight, said while he believes the housing market is a year away from an upturn, other factors are keeping a recession a bay. “We all know the economy is slowing, but our bottom line is that it’s a soft landing,” said Behravesh, who predicts the first depreciation in home values since the Great Depression. “Housing is in for a hard landing, which has slowed growth, but housing is offset by strong capital spending and strong exports.”

Behravesh said the U.S. dollar is coming down, and that will help export growth even more. He believes the feds are keeping inflation in check by curbing interest rates. “I think that we may even see interest rates cut next year,” he said. As for fuel, recent declining prices have had a big impact on the economy. “With prices coming down, it’s like a huge tax break for consumer,” Behravesh said.

John Felmy, chief economist for the American Petroleum Institute, said fuel capacity is still tight, and a forecasted colder winter could have an impact on oil prices. But overall, there are no significant supply problems foreseen in the near future, said Felmy, who attributed tight fuel capacities to global growth of countries like China and India. While the United States may find strong competition from developing countries in some areas, it stands to gain economically in service and technology sectors, Behravesh said.