This Editorial appears in the Oct. 31 print edition of Transport Topics. Click here to subscribe today. The most recent bits of news about business conditions and the economy suggest that, while we can’t be sure we’re out of the woods yet, the most dire predictions of a double-dip recession a couple of months ago apparently were too pessimistic.
Freight is increasing, carriers’ profits are gaining, equipment sales and orders are strong and the economy rebounded in the third quarter after hitting a weak patch in late spring-early summer.
American Trucking Associations reported last week that truck tonnage increased 5.9% in September from a year earlier, making that the 22nd month in a row that the industry had more freight to haul. That’s good news for the carriers that survived the 2008-2009 recession. Because economists regard trucking as a bellwether for the economy, it’s a good indication that the economy will keep growing.
Earnings of publicly traded motor carriers back that up. Last week, almost all of a dozen carriers said their profits in the third quarter exceeded a year earlier, in most cases by a huge percentage. And they said they expect even better times in the fourth quarter.
For example, the chief executive officer of Forward Air Inc. said, “Tonnage firmed up very nicely, ending the quarter with system tonnage up 9.5% for the month of September.”
CEO Bruce Campbell said his October volume was “moderately better” than normal at this time of year.
Most other carriers agreed that the fourth quarter looks even better than the third quarter did, but most are still keeping a lid on capacity, partly to hold down costs and partly because they’re having trouble finding enough good drivers.
Driver shortage is an unfortunate byproduct of prosperity, and the rigorous focus on driver performance by the Federal Motor Carrier Safety Administration in its Compliance, Safety, Accountability program makes the market even tighter.
Meanwhile, truck and trailer factories are humming. Most tractor production slots for the rest of the year are already spoken for. Truck sales soared 70% in August from a year earlier, and sales for that month topped 15,000 units for the first time in more than four years. Most of these sales are replacing old trucks that fleets kept past their customary three-year use-by date.
To underscore the truckers’ optimism, the Commerce Department estimated last week that the economy grew at a 2.5% annual rate in the third quarter, almost twice the pace of the second quarter, when the economy looked like it was about to stall.
Of course, the gross national product could be revised downward, and with unemployment still stubbornly stuck above 9%, the economy still looks fragile.
