Overview of the 2013 trucking industry economic forecast
Bob Costello, chief economist of the American Trucking Associations, announced his 2013 forecast for the trucking industry on Wednesday at the ATA Management Conference Exhibition. In short, it doesn't look so great, but it also doesn't look too terrible.
Joining Costello in the three member panel discussion were IHS Global Insight’s senior economist Gregory Daco and the National Association of Realtors’ senior vice president of research and chief economist Lawrence Yun.
“Unfortunately for the next few months, freight volumes are going to go sideways,” Costello cautioned, expressing concern about the decrease in manufacturing.
Costello tempered this prediction by saying he believes carriers with flatbed trucks will continue doing well due to the increase in housing construction. Tank trucks will also be in high demand because of the oil and gas industry’s new developments in fracking, a method of extracting natural gas from shale rock.
Throughout the 40 minute discussion the three panelists focused much of their commentary on how their respective industries will be affected by the upcoming “fiscal cliff.” Some economic experts believe that this combination of spending cuts and tax increases scheduled to take effect on January 1, 2013, will force the American economy back down into a recession and increase unemployment.
Yun was optimistic about the housing market, estimating that the next two years will see a 50% increase in housing starts, as long as the national economy does not drop sharply after the January 1st deadline. “Those will be solid gains, but we have to remember we need to increase 100 percent just to get back to normal,” Yun explained. Yun expects housing prices to increase by 5% in 2012 and another 5% in 2013. As home values increase, Yun expects that homeowners who had been underwater on their mortgages will be able to sell their newly valuable homes and move to newer homes.
Daco tentatively predicted that the U.S. economy would grow at a moderate pace, probably just over 2% of the GDP in 2012 and just under 2% in 2013. However, he cautioned that there are multiple risks which could decrease growth and halt the economic recovery. While the housing market is rebounding well, U.S. exports have decreased because of global economic difficulties. Daco sees the worldwide economy as potential trouble for the U.S. China’s current fiscal difficulties could cause some trouble, and if Europe falls into a deep financial crisis, the U.S. economy might also drop. Daco also mentioned the uncertainty around the U.S. debt ceiling as a sticking point for economic growth.
Costello expects that once industry has weathered the “fiscal cliff,” trucking companies will be pressured to replace equipment they had to sell during the recession.
In spite of the increase in need for flatbeds and tanker trucks, Costello said the trucking industry has so far been able to keep up with demand, but that could change if GDP growth turns out to be even slightly larger than predicted. If the U.S. sees a 3% growth in GDP, “we would not have enough trucks to handle the corresponding increase in freight,” he said.
Costello was also concerned about the upcoming shortage of drivers. “This speaks to the continued threat of our current quantitative driver shortage of 20,000 to 30,000 drivers potentially getting worse in the future."