2012 Economic Outlook

As long as there isn't any sort of serious new recession in 2012, demand for trucking will outpace the drivers and vehicles that trucking companies can muster. While they are starting to add some extra capacity, truck driving jobs might be left vacant considering that qualified drivers aren't always easy to find. While there might be a 5% average increase in trucking base rates in the coming year, capacity is going to be a major problem.

Trucking companies lost the most capacity in the flatbed segment. On the other hand, gains in average revenue per mile have been realized because of the size differences. For instance, flatbed loads are down 2.8% in 2011 through September compared to the previous year. On the other hand, average revenue per mile is actually up 7%.

Nevertheless, there is a real fear that trucking companies might eventually feel a freight crunch because of a lack of capacity. This could end up causing a lag in the industry, due to the resulting bottleneck. Individuals who ship freight want a timely arrival at the destination, and if capacity is completely outpaced by demand, this means that delays might start to set in. On the other hand, an increase in truck driving jobs might be welcome news to those who were previously put out of work because of previous economic conditions.

The capacity that has been added is just about hovering above replacement demand levels, according to some commentators. This means that a sudden rise in the amount of freight that needs to be shipped would quickly create a capacity crunch. This isn't necessarily the only problem in the industry either, since costs are becoming a major issue.

Freight rate increases can usually lead to higher profits for companies involved in logistics. However, this might not be true in 2012. It was not true in 2011, and despite freight rate increases in that year, cost increases outpaced rising profits. Equipment costs is a very important segment of the industry to consider. The used equipment market seems to be in a boom for the time being, and it doesn't show any signs of slowing down. Even though depreciation costs are higher, it's said that carriers don't mind shelling out extra cash for more efficient machinery.

If a truck is going to deliver in terms of fuel economy, carriers seem ready to pay for it despite the high cost of depreciation. Oil prices have fluctuated in recent years, so this seems like a logical way of thinking. The price of diesel can be a major issue when working out the books.

On the other hand, carriers are getting better when it comes to collecting fuel surcharges. These help to offset the higher costs of diesel fuel. While it seems that this could put some pressure on margins, it isn't as notable as it used to be. Nevertheless, the hours-of-service regulation changes might hamper business even if fuel costs don't.

Trucker service hours have been discussed frequently, even in the mainstream media. These tighter regulations have an unfortunate opportunity to seriously hurt productivity. If they do so, some of the cost and capacity issues might turn out to be that much more profound.

The economic indicators don't look quite so negative, however. Some commentators have suggested that the United States economy will flirt with another recession, but ultimately pass it by. The economy will be doomed to grow slowly, according to many measurements, but it should still manage to grow. The Eurozone crisis seems to be major driving force behind a potential recession, since US banks would be exposed to a collapse in Europe. Such a collapse could potentially cause a domestic credit crunch.


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