Editorial: A Great Confluence
This Editorial appears in the Nov. 10 print edition of Transport Topics. Click here to subscribe today.
Describing the present accurately can often be difficult work. As for predicting the future . . . well, that way madness lies, but sometimes, it’s impossible not to take notice.
Consider election returns, industry earnings, truck orders and crude oil prices. Seeing this combination leaves us feeling very optimistic about the industry’s health over the next year, at least.
October orders for new North American Class 8s leaped 76.5% over a very good October 2013 figure. The 46,200 reservations recorded was the second-best tally ever, researchers said, topped only by March 2006 during the height of that year’s pre-buy blowout.
Truck dealers have been enjoying good sales, and the string will continue because businesses just want to buy trucks. There’s no gimmickry in dodging regulations or lunging for bonus depreciation; it’s just simple need.
Why? Look at U.S. gross domestic product numbers: up at a 3.5% annual rate in the third quarter after 4.6% in second quarter. The first three months of the year saw a depressing contraction, but other than that, real GDP has grown by at least 3.5% a year in four of the past five quarters.
Usually, growth produces high oil prices, but crude oil trading in New York is below $80 a barrel for the first time since June 2012. As recently as this past June, the price was $107.
Diesel is down and demand for freight-hauling services is up, so most carriers issued ruddy third-quarter reports featuring increases in revenue and profits.
And then there were elections, the muddled part. Republican took control of the Senate and made additional gains in the House.
GOP control of the House made anti-business legislation highly unlikely, but now there might be an opportunity for some pro-business measures next year. The main question is, How will a unified Republican Congress deal with a Democratic White House?
The inaction of 2013 and 2014 could continue, or the elected officials in Washington might actually decide to do something. President Obama probably does not want to spend his last two years in office limping into obscurity, and Republican leadership on the Hill would like to demonstrate some responsibility.
We wish both sides the best and modestly suggest that long-term surface transportation would be a great place to start.
There is always plenty of woe and difficulty to worry about. The driver shortage, current and pending regulations, geopolitical conflict and natural disasters come quickly to mind. But for the moment, the pavement is mostly dry and the sun is shining.
Enjoy it.
