Economy, Trucking Industry Roar Back
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Economic indicators and forecasts from economists show trucking and the U.S. economy are in the midst of a strong recovery, though concerns remain about the persistent shortage of drivers and supply chain delays.
“We’re on track to be coming back,” said Stephen Burks, an economist at the University of Minnesota-Morris who specializes in the trucking industry. “A market-based economy is the most effective in the world to react to a sharp contraction or a sharp expansion, but that doesn’t mean it’s easy.”
Burks believes both the trucking industry and the overall economy will continue to see substantial growth for at least the next year.
The U.S. economy and retail sales are growing far faster and more steadily than anyone could have expected just a few months ago, said Jack Kleinhenz, chief economist at the National Retail Federation. It expects 2021 retail sales to grow between 10.5% and 13.5% compared with 2020. In dollars, that’s between $4.44 trillion and $4.56 trillion. That’s up from its initial forecast, released in February, for growth between 6.5% and 8.2%.
“We are seeing not just unprecedented growth from months of pent-up demand as the economy reopens but momentum as well,” added Kleinhenz.
Additionally, the Equipment Leasing and Finance Association said consumer spending jumped a robust 11.4% in the first quarter and that included a 49% year-over-year jump on durable goods, such as washing machines, dryers, refrigerators and other big-ticket items often transported by truck.
American Trucking Associations Chief Economist Bob Costello said while trucking and overall economy are performing at a high level the problem is on the capacity side.
“It’s remarkable to me that demand for freight transportation is up, pricing is up, yet in the truckload industry, some fleets that we measure, they’re actually reducing their tractor counts — not because they want to, but they can’t find drivers to put in their trucks. This is a supply-side story over and over,” Costello said.
The June Logistics Manager Index Report registered 75.0, the second-highest reading ever. A year ago the index registered 61.7.
Authors of the index, which includes transportation and academics, said this is the fifth consecutive month the rate has come in above the 70-point mark, marking the longest streak in the index’s history.
However, the report said available transportation capacity has been contracting for five straight months and that for every four loads of freight, only three are being picked up.
The lack of available trucks and drivers means, according to the report, that spot rates are up 46.8% year-over-year for dry vans and 51.9% for flatbed freight.
Rajeev Dhawan, director of the Economic Forecasting Center at Georgia State University in Atlanta, said because of the COVID-19 pandemic the U.S. economy is in the midst of a fundamental shift. E-commerce continues to rapidly gain market share, and that changing dynamic will continue to have a huge impact on trucking as more items are shipped directly to homes.
“I tested it personally last year when I ordered lightbulbs online. This is the most fragile thing and they came OK. Then I did it two more times and they delivered it perfectly,” Dhawan said. “Once that happens, people will ask why am I going to a store to buy them. It’s convenient.”
The pandemic forced people to do more online shopping; and now, 89% plan to do as much or more of their shopping online, even as restrictions are lifted. Read our latest study for key insights on consumer shopping preferences post-pandemic: https://t.co/eSC02uNwN2 pic.twitter.com/lsmUWPfCrC — Ware2Go (@Ware2Go) July 8, 2021
A recent survey by the Atlanta-based logistics company Ware2Go found that 79% of respondents said their online shopping habits increased because of the pandemic. Some 89% plan to buy more items online.
Burks said the message to the trucking industry for at least the next year is clear:
“Make hay when the sun shines. Rates are going up,” he said. “But make sure to take care of your drivers. Keep your drivers happy, at a level you can support with the increased rates.”
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