Economists at NTTC Predict Solid Year for Trucking in 2015
Three business economists presenting information at the National Tank Truck Carriers annual conference here April 28 said first-quarter growth of 0.2% per year was due to harsh weather and the West Coast ports slowdown and not a fundamentally poor economy.
Trucking, they said, should continue to enjoy another year of strong growth, in part because two major shipper groups — petroleum and chemical production — will continue to grow, the economists said.
“There is a virtuous cycle in place,” said Martha Moore of the American Chemistry Council, suggesting that recent economic growth is begetting more of same for the near future.
Despite the lackluster first quarter, American Trucking Associations Chief Economist Bob Costello said he expects annual GDP growth of about 2.8% this year.
“We’re even starting to see wage acceleration — which we have not seen yet during this [business cycle],” he said, adding that the strong U.S. dollar should help keep inflation low, although the exchange rate can hurt exports.
First-quarter tank truck loads grew by an unremarkable 2.8%, year-over-year, Costello said. In contrast, refrigerated loads grew by an eye-popping 12.7%, while flatbed loads hauled contracted by 4% for the quarter, he said.
The current moderate growth at tank carriers, though, should be placed in the context of the sector’s surge since the sector hit bottom in 2009 during the recession. Growth in tank loads was 6.3% in 2013, and the slow, recent expansion still keeps the tank industry near historic highs, Costello said.
Tank trucks, which usually move very heavy loads, are a key part of overall truck tonnage, Costello said. The sector moved about 25.6% of total truck tonnage in 2013 with only about 10% of the industry’s tractors.
Crude oil and refined petroleum make up nearly half of the tank loads. John Felmy of the American Petroleum Institute said the boom in domestic oil production has helped tank truck carriers and led to falling oil prices in much of 2014.
The falling prices have caused the oil industry to pull back, Felmy said, but some activities must continue.
“If you have a lease, for instance, you have to keep drilling or you’ll lose it,” Felmy said. He drew a distinction between oil exploration, which continues, and production, which has been curtailed.
Felmy said truck drivers have tended not to be among those laid off by oil companies. Oil-field service providers, such as Halliburton Co. and Schlumberger Ltd., are in less demand though, he said.
