Industry Forecast: Fuel Prices Up, Freight Demand Down

SAN DIEGO -- Truckers will have more than high fuel prices to worry about in the year ahead; they will also face a slowdown in freight demand, rising operating costs and a continuing shortage of drivers, industry executives were told here Oct. 29.

That will all put increasing pressure on company profits, according to a panel of experts who participated in a "Future of Trucking Roundtable" at the American Trucking Associations' Management Conference and Exhibition.

	Michael James - Transport Topics
	Martin Labbe, a panelist on 'The Future of Trucking Roundtable,' responds to a question from the audience following the presentations Sunday morning. Audio clips from the roundtable

Economist Martin Labbe, president of Martin Labbe Associates of Ormond Beach, Fla., said he expects carrier costs to increase 9% overall next year as a result of higher fuel, health insurance and driver wage increases. Freight demand will weaken, he believes, due to cutbacks in domestic manufacturing and a drop in consumer spending. Higher interest rates will make it more difficult for trucking companies to invest in technology and add to shippers' cost of inventory.

A surplus of some 70,000 used trucks - the result of a truck buying binge over the past three years - will continue to plague the industry for several more years, Labbe predicted. Too many used trucks hurts the industry by inflating freight hauling capacity and limiting the value of equipment assets on the books.

Tony L. Benjamin, president of CT Express and Certified Learning Systems, said trucking must change the way it recruits, trains and rewards its driver force if it is going to meet demands of future economic growth.

	Michael James - Transport Topics
	Tony enjamin, a panelist on 'The Future of Trucking Roundtable,' listens to a question following the program Sunday morning.

A one-time investment analyst and pro football player, Benjamin said fleets need to tackle the problem by choosing a driver training school much like someone would select a stock broker. He urged executives to get involved in "asset selection" and acquire promising driver candidates before they get a commercial driver's license, and then "reinvest" in drivers by giving them more training and more career choices after being hired.

The emergence of new broadband technologies will bring major changes to trucking, according to Glynn Spangenberg, vice president of business operations for Qualcomm Wireless Business Solutions in San Diego.

New high-speed data networks will allow truck drivers and truck equipment to be "online all the time," Spangenberg said. Companies will be able to remotely program electronic controls on engines, for example, to improve fuel economy. Drivers will be able to scan and documents via the Internet and even receive streaming video, creating a whole new means of communicating with the office, family and friends from the truck cab.

Timothy J. Quillen, vice president of Stephens Inc., a Little Rock, Ark.-based investment bank that focuses on transportation and supply chain management, echoed the concerns of others about the finances of trucking companies. To survive, he said firms must embrace the Internet as a way to fill empty trailers and minimize back office expenses.