It seems that wherever you turn these days, someone has an opinion on the economy. It’s good, it’s bad, it’s muddling along. Forecasting the impact it has on trucking is no exception. A mix of recent news implies that caution may be the proper path going forward, even as sunlight peaks through the clouds.
According to results from GE Capital’s fifth U.S. Mid-Market CFO Survey, financial executives are in a decidedly positive mode. The poll of 500 executives chosen from seven distinct industries, including transportation, found that 67% expect higher revenues in 2012; 74% plan to hire; and 81% see stable or improving profits. All of those numbers are up at least 5 percentage points from the previous survey.
When the responses of transportation executives were culled from the survey, even more positive signs of improvement emerged. Of those surveyed, 47% of transportation CFOs predicted an increase in their company’s profit margins, outpacing the most optimistic among their peers across all industries. Also, 54% reported moderate businessspecific growth expectations, again tops of all industries.
WHAT LIES AHEAD
The greatest transportation business opportunities noted were acquiring new customers and increasing average revenue per loaded mile (59% each) with increasing tonnage volume from existing customers cited by 57%. With those expected increases, most transportation CFOs—80%, in fact—expect to hire in the next 12 months, increasing the workforce by 9% on average.
Transportation CFOs remain concerned about fuel price volatility, with emissions 32 I vehicle graphics 44 I first person 58 I safety 411 60 I private fleets 62 I closing the deal 64 managemenT 67% citing that as their biggest concern. An additional 59% were concerned about the impact of safety and truck accidents.
“When you go through the survey results, you find 90% of the trucking CFOs expect the industry will continue to grow [this year],” GE Capital’s Dan Clark told Fleet Owner. “However, even as their revenues go up and tonnage stays solid, we won’t see them adding trucks—so they will be looking at profits as they continue to come out of the downturn.”
Clark’s observance is being backed up by the latest Class 8 sales figures as net orders for Class 8 trucks fell in April, according to both ACT Research and FTR Associates.
“Orders continued to come in below the level ultimately needed to sustain current rates of build,” said Kenny Vieth, ACT’s president & senior analyst. “Conditions that contributed to the soft patch that started in March were still in play in April, including higher diesel and newtruck prices.”