Motor Carriers Well Positioned for Growth over the Next Decade, ATA’s Costello Says
This story appears in the April 20 print edition of Transport Topics.
Motor carriers will be well positioned over the next decade to gain business from faster-growing economic sectors such as durable goods, exports and chemical shipments, American Trucking Associations’ chief economist said last week.
As the U.S. economy recovers from the recession, shipments of light vehicles, appliances and other durable goods should rise more than 60% between now and 2020, twice the pace of nondurable goods such as food, Bob Costello said, citing the U.S. Freight Transportation Forecast to 2020. Export growth is expected to exceed import increases, and chemicals should lead in growth rates as well, he said.
“Exports are going to be very robust,” Costello said in an April 14 webinar. “That’s a good thing for freight transportation. Future manufacturing growth is a good thing for freight transportation as well.”
One area that probably won’t change much, he said, is the share of freight carried by each transport mode, with trucking expected to edge up to 71% of total tonnage in 2020 from 69% now.
IHS Global Insight prepared the study for ATA.
The market-share changes, most visible as trucking gained at the expense of rail, already have occurred as trends such as more just-in-time delivery and supply chain streamlining favored trucking because of its greater flexibility, he said.
Limited changes in market share won’t lessen competition within modes, Costello said. He noted that while rail intermodal is expected to grow faster than other businesses, it will represent only 1.5% of freight tonnage by 2020.
Costello didn’t give a specific date when the growth pace would resume after an expected 3.5% drop in gross domestic product this year. The forecast pegged the average growth rate for 2009 through 2014 at 2.2%, or less than the average of 2.9% from 1980 through 2007 but better than the 1.1% achieved last year.
Export growth is forecast to reach 6.1% and exceed import percentage growth, reversing the patternsince 1980, when imports grew faster. Imports are expected to drop 19% this year, compared with 15% for exports.
Costello said that future global trade and supply chain trends could deviate from the forecast if fuel prices surge and prompt companies to expand in Mexico instead of Asia because of lower transportation costs. More shipments through the enlarged Panama Canal also could help trucking, he added.
One new export growth area is used trucks because those markets opened in 2008.
“Once the world economy rebounds, I think those markets will open up again and we will see more overseas sales that gets them [tractors] out of the U.S. permanently,” Costello said.
Future truckload and LTL growth will follow a pattern similar to manufacturing, according to the forecast.
Manufacturing is expected to grow 2.3% between 2009 and 2014 and 3.5% from 2015 to 2020. Truckload should grow 2.3% and 2.8% respectively over those periods, while the LTL pace is expected to be 2.6% and 3.6%. Costello didn’t provide tonnage forecasts for 2009 in the webinar.
