Economists Warn Of Trucking Capacity Crunch

Truck Tonnage Up Slightly For February 2013

Yesterday, American Trucking Associations Chief Economist Bob Costello forecasted that the trucking industry will “eventually see a capacity crunch” as demand for freight service will outweigh the number of drivers.

“At the moment, fleets are expanding slowly,” Costello said, “which means that once we see more consistent, accelerated economic growth – think 2.75% or 3% increases in GDP on a regular basis – it will eventually cause very tight capacity.”

On Sunday, Costello, ACT Research President and Senior Analyst Kenneth Vieth and Wells Fargo Managind Director and Senior Economist Mark Vitner joined a panel discussion sponsored by Bendix Commercial Vehicle Systems LLC.  The panel was moderated by Fox News Channel’s Stuart Varney.

“Costello said at the moment, ATA’s seasonally adjusted truck tonnage index was increasing faster than overall loads, which is a sign of a limited recovery,” an ATA press release stated.

“Our tonnage index continues to rise, mostly because recovery in sectors like energy and construction are outpacing the recovery in the general economy,” he said. “So that heavy freight is really driving tonnage even if the number of loads is growing slower.”

Costell said that slow growth, along with rising costs, will reduce profit margins in the foreseeable future.

“While we do see tightening capacity going forward, until we get to those consistent levels of growth, margins will be under pressure because the costs of fuel, driver recruitment and retention and equipment will rise faster than freight rates,” he said. “However, once capacity does tighten, carriers will see improvement on the bottom line.”