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‘There’s more freight coming your way’ in 2017, trucking economist contends

Semi truck on the highway

Bottom line, Costello noted, “there’s more freight coming our way.” He projected a 2.6 overall increase in tonnage after being essentially flat in 2016.

Carriers should, if current indicators hold true, prepare for better freight volume in 2017, said American Trucking Associations Chief Economist Bob Costello.

Costello laid out a picture for 2017 around trends affecting freight and, consequently, driver pay for the recruiting/retention-specialist audience at Conversion Interactive Agency’s annual conference in Nashville, Tenn. With a focus on driving decisions in hiring, leasing and ongoing employment through data, the event’s theme was of a piece with Costello’s message, that indicators reveal fleets would do best to prepare for growth in the coming years.

While overall economy growth was tepid in 2016, and a freight recession through much of the center part of the year hampered a lot of growth for trucking companies, some key indicators related to consumer spending have been stronger. Compared to overall economic growth at less than 2 percent, for instance, consumer goods consumption rose by nearly 4 percent in 2016, Costello said. He projected that growth number to hold around 4 percent over subsequent years as well.

Reports show slow freight, rates took their toll on largest carriers’ bottom lines in 2016

2016 earnings reports from some of the country's largest carriers -- with a few exceptions -- show drops in revenue, income and other metrics.

“This will help freight going forward,” he added. The housing market, too, has been proceeding at a good pace, with “2.1 million new homes [built] this past year,” way up from the 2010 low of about 550,000. Costello expected continued growth to benefit building-materials haulers at a “good sustainable pace at this moment.”

Also, after 2014, which Costello noted “could go down as the greatest year in trucking” in terms of improved rates, freight availability, profitability and more – “It was so tight, full truckloads were getting moved into LTL” –  the unsustainable nature of the rise led to a glut of inventories stocked around the nation. Finally, in a trend that begin last year and continues, “we’re clearing out that glut of inventories throughout the supply chain,” Costello said, a positive factor for freight availability coupled with continued strong goods-consumption growth.

A countervailing factor in factory output growth rates – which haven’t “been very good as of late” – could temper some of the gains. While the growth rate has been down after averaging 3 percent a year between 2010-14, it’s started to creep back to that rate. “I continue to be bullish on North American factory output” in spite of the North American Free Trade Agreement wildcard, Costello noted. If a stalemate on renegotiation or some other as yet unforeseen big shift occurs, however, it could temper any gains there in a big way. But Costello believed that was fairly unlikely, with factory output most likely to get “back up to that 3 percent growth rate after being down for several years. … Factory output is moving in the right direction – it’s a little soft, but moving up.”

Indicators: Truck tonnage jumped in January, index hints at positive momentum for rates

Indicators: Truck tonnage jumped in January, index hints at positive momentum for rates

Hopes for a turnaround in the soft trucking environment remain as tonnage rose in January and line haul rates saw their best year-over-year numbers in ...

Bottom line, Costello noted, “there’s more freight coming our way.” He projected a 2.6 overall increase in tonnage after being essentially flat in 2016.

See recent reporting on the 2017’s freight outlook at the links below.

CCJ MarketPulse: Fleets optimistic about 2017

MarketPulse survey respondents are increasingly bullish about business conditions over the next six months, with 56.5 percent of respondents expecting business conditions to improve. That ...

Survey: Shippers expect freight volumes to climb in 2017

Survey: Shippers expect freight volumes to climb in 2017

Shippers mostly expect freight movement to grow in 2017, according to a survey of more than 2,200 shippers recently conducted by Averitt Express, one of ...

Indicators: Trucking Conditions lagged in December, but still expected to gain in 2017

Indicators: Trucking Conditions lagged in December, but still expected to gain in 2017

Despite a December decline, FTR still projects conditions for 2017 to steadily swing in carriers’ favor. Also, the DOT reported a freight upswing in the ...

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Todd Dills is Senior Editor of Overdrive magazine and writes from Nashville, Tenn. He frequently covers business, regulatory and lifestyle topics for the magazine and at OverdriveOnline.com. His work on the “CSA’s Data Trail” series in Overdrive about the federal CSA program was awarded the highest honor in trade journalism – the “Grand Neal” – by American Business Media at the 2014 Jesse H. Neal Awards. Dills’ Channel 19 blog covers a grab bag of on-highway hearsay, owner-operator news and driver views from the roadways the nation over. His work in trucking journalism builds on a background of news feature, fiction and other creative writing and editing. Find him here at the Channel 19 blog and via his Twitter feed, or send tips to tdills@randallreilly.com or via phone at 205-907-2481.