It may be too soon to break into a toothy grin. Nevertheless, the word has come in that ‘04 is shaping up to be quite a good year for for-hire trucking.
And for any carrier executives having trouble recalling the last halcyon days, oh let's see, that would be way back in 1999, that prediction should be enough to put at least the hint of a smile back on their seen-it-all faces.
The cheery outlook that got us snappin' our fingers and tappin' our toes to the beat of trucks hauling more and more freight from sea to shining sea was presented last month during Bridgestone/Firestone's commercial-tire dealer meeting in Chicago.
The Windy City was enjoying its first taste of spring after a long winter, nicely setting the stage for the upbeat message delivered by Bob Costello, executive vp & chief economist for the American Trucking Associations.
“The economy is grower stronger,” Costello stated, providing the foundation for the “best growth in truck tonnage in several years.”
He said GDP (gross domestic product or value of all goods and services produced) in the U.S. grew at an annual rate of 6% from July to December ‘03. Costello expects that growth will be sustained at a 4.5% to 5% rate over the first quarter of this year.
Costello said this growth shows that manufacturing production is “finally seeing a turnaround.” While he explained that business spending had been the “missing link” in the recovery, manufacturing production “has surged since August ‘03 and now the factors are in place for robust [manufacturing] growth.” For example, he noted that in February, production of office equipment alone jumped 23%.
“Profits are up, interest rates are low,” explained Costello,” and businesses are finally investing out of necessity.” He said U.S. companies have little choice but to invest in the latest equipment and technology to stay productive in the face of global competition.
Costello contends that the manufacturing segment's inventory-to-sales ratio is “too lean to support a fast-growing economy.” He says the upshot is to expect manufacturing growth to be “at least 5% this year.”
While Costello said 2.4-million jobs have been lost due to companies moving operations overseas or simply going under, “employment has grown recently” as more displaced workers move into new jobs.
Costello said those all-important retail sales — responsible for two-thirds of our economy — will turn in a 4% to 5% growth performance this year.
Reviewing the freight market by segment, Costello said the gains are not uniform. “LTL is seeing greater growth than truckload” he stated, “but then they had experienced the longer drop.”
He also pointed out that truckload operations with average hauls of over 1,000 miles have “yet to see much recovery.” They “may have lost some freight to rail intermodal” during the downturn and must now win it back.
On the bright side, everyone still at it in truckload should be cheered to know that the “barriers to entry are now high enough to limit the magnitude of new entrants in this recovery.”
While there are negatives to deal with — high and volatile fuel prices, still rising insurance rates and driver churn, and ‘07 engines around the corner were mentioned by Costello — the economic good times ahead cannot be overlooked.
“All groups should grow [this year] in trucking, [albeit] at different rates for the first time since 1999,” Costello stated.
Okay, then the artist now known again as Prince was right: Party like it's 1999!