Slow recovery for freight, conference attendees say

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The worst is over for the freight economy, but recovery will be slow and uneven, according to speakers at the recent FTR Associates Freight Transportation conference, which took place in Indianapolis on Aug. 25-27. More than 170 attendees were presented with the views of professionals from the Federal Reserve, Wall Street, freight carriers, shippers, suppliers and consulting firms, as well as FTR Associates itself.

Some specific points made during the conference, according to FTR:

  • Subdued consumer spending will slow the pace of recovery, leading to continued high unemployment. Unlike most previous recessions of this magnitude, economic growth will be subdued despite the depth of the current downturn. This indicates that growth in freight volumes will be gradual;
  • We are at the bottom of the steepest decline in freight since the 1980-1982 downturn. Freight is down 15 percent from the previous peak;
  • Freight transport will continue to be a buyer’s market for the near term, as depressed freight levels and substantial excess capacity will continue to be the rule. This will put continued pressure on carrier margins;
  • High levels of excess capacity are expected to continue, in some instances due to banking’s current reluctance to foreclose on heavily discounted assets at near-bankrupt carriers;
  • Equilibrium for carriers may not be reached until 2011 unless there is a more rapid recovery than currently expected; and
  • Both rail and motor carrier equipment sales are expected to lag the improvement in freight, and will recover slowly. Sales may not reach the peak 2006 levels for a decade or more.
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