Analyst Outlook for 2016 Trucking Varies
What does 2016 have in store for the trucking industry? It depends on who you ask.
Freight industry experts vary in their forecasts for the upcoming year. Factors such as the economy, corporate capital expenditure budgets, the ongoing driver shortage and weakness in commodity markets have been cited by Transport Topics as strong influencers moving forward, but analysts don’t necessarily agree on the extent to which these and other factors will impact trucking.
“Economic and freight growth typically move at the same pace, and freight growth is likely to slow because the U.S. economic expansion is ‘growing old’ after nearly seven years,” said Noel Perry, a managing partner at freight intelligence firm FTR. “The very strong manufacturing and industrial expansion that we have had in this recovery is slowing.”
“Industrial production dropped about 1 percent so far this year after climbing 4 percent or more in 2014. That strength has sustained freight growth, which has exceeded GDP so far in the current recovery. However, as the economy slows, that trend should reverse itself, based on historic trends of slower freight growth late in recovery periods,” Perry added.
More down the road
Although the trucking industry is widely accepted as an accurate barometer of U.S. economic health, there is some talk of a recession in the freight sector as soon as 2017 ¾ regardless of whether the overall economy is growing or not. But despite a cautious outlook by some for 2016, other experts have a more optimistic view of things to come.
Deutsche Bank transport analyst Robert Salmon recently reported “the operating environment is still in decent shape for next year. The consumer is relatively stable with lower fuel costs and gradually improving employment trends, which should provide a modest bump in delayed peak-season demand.”
Solomon also pointed out that two big drivers of overall truck volume, the housing and automotive industries, continue to see relatively healthy demand.
“Both need trucks to carry heavy freight. The industry belief is that every new home going up creates 10 to 20 truckloads of freight. And in the auto market, it’s not just about finished cars. Truckers also haul a large share of the parts and materials, such as steel, rubber and motors, that go into making them,” he said.
Werner Enterprises chief financial officer John Steele also commented on the outlook for next year at a recent investor conference, saying that 2016 would be “more dependent on the consumer” in an economy that “generally feels OK.”
While he expects a solid freight market, Steele added that it’s difficult to determine trucking’s strength at the present time.
ATA weighs in
By and large, experts within the trucking industry expect the number of truckloads moved by carriers around the country to increase in 2016. According to the American Trucking Associations (ATA), 81 percent of the total revenue seen in the shipping sector will be the result of activity by trucking companies. Steady increases are expected with revenues swelling by 66 percent by the year 2022.