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FUELING YOUR MIND FOR THE ADVENTURES AHEAD

Is U.S. Trucking Industry Signaling Recession Threat?

March 17, 2016 by Carina Ockedahl, @Ockis9

The U.S. trucking industry could be facing a slow down and some analysts consider that a leading economic indicator for recession.

Among the worrying indicators are weakness in the manufacturing sector and high business inventories, Don Ake, an analyst at industry research firm FTR, told Trucks.com.

“Trucks haul goods and, if you need fewer trucks now, then you are hauling fewer goods in the future and economic growth should slow,” he said.

The trucking industry is an important barometer of the economy. It accounts for nearly 69 percent of the tonnage carried by all modes of domestic freight transportation, according to the American Trucking Associations. Trucks hauled just under 10 billion tons of freight in 2014, accounting for $700 billion in revenue for motor carriers.

While consumer demand may stabilize and manufacturing could improve, “people who are forecasting improvement in the economy are still very cautious for the next twelve months,” Ake said. “There is a high degree of economic uncertainty—a lot of caution going forward for the rest of this year and on into 2017.”

Any improvement in manufacturing will help the trucking industry, Ake said.

However, FTR’s January Trucking Conditions Index shows that growth will be slow, and will create a tougher operating environment for fleets in the second half of the year, Ake said.

The ATA has also seen a slowdown. Its advanced seasonally adjusted For-Hire Truck Tonnage Index—an indicator of shipping activity across the nation—dropped 1.4 percent in January.

High inventory stocks continue to weigh on truck freight volumes, which have been falling since the second half of 2015, according to the ATA.

“The sooner the supply chain cleans out the excess stocks, the better for trucking,” said Bob Costello, ATA’s chief economist.

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