Study Finds Factories, Exports to Boost Freight Through 2021

This story appears in the May 17 print edition of Transport Topics.

Fueled by renewed growth in the export and manufacturing sectors, trucking will resume solid growth between now and 2021, according to a new study released on May 13.

The latest Freight Forecast report, commissioned by ATA and written by IHS Global Insight and Martin Labbe Associates, projected freight tonnage growth across all transport modes of 25% and growth of 30% for trucking between now and 2021. Total tonnage across all modes fell 14% last year from 2008 levels. 

“There are certainly some risks, but I think better days do lie ahead for the freight-hauling business,” said ATA Chief Economist Bob Costello. “If 2009 doesn’t go down in the record books as the Great Recession, I don’t want to see the Great Recession.”

The study also forecast total revenue growth of 69%, as carriers move more light, high-revenue and high-value goods, such as semiconductors.

“Trucking will continue to dominate the transportation industry,” Costello said, though he noted that rail, airfreight, water and pipeline tonnage also will grow.

Trucking is expected to grow its total share of the freight market to 70.7% by 2021 from 68% last year, helped by the move toward lighter products. The study predicts a 50% rise in general freight and 15% growth in bulk freight largely moved by water, pipeline and rail carload.

Rail intermodal is projected to have the fastest growth at 80% but off a small base of less than 2% of total tonnage. Rail carloads will grow at a slower pace, less than 2% a year, comprising 12.5% of all tonnage.

Freight trends will drive gross domestic product growth of 3% a year on average through 2015, and 2.7% annually after that will drive the freight growth, the study said.

Costello said he is “very pleased with how this recovery is shaping up,” though he cautioned that the steep drop in economic activity last year means that pre-recession manufacturing levels likely will not be reached until 2013.

Exports are expected to more than double between now and 2021.

“If you are hauling exports, things are going to look pretty good,” Costello said. “Imports should be pretty good as well, because there is a larger base of traffic.”

Manufacturing, which accounts for almost half of all freight tonnage, is projected to grow at a 5.1% rate this year and 4.7% through 2015, after falling 11% last year.

Costello forecast a continued pickup in housing, which is another key market for trucking, with housing starts in 2011 at about 1.5 million, twice the 2010 projection and almost triple last year.

The report also projects a rise in the number of trucks in service. Expectations are for a 17% increase in the Class 8 population by 2021 to 2.7 million, with a 20% increase in Classes 6-7 and 25% in Classes 3-5. Each of the latter are expected to total about 2.4 million units by 2021.

The truck population study, done by Labbe, forecasts a longer replacement cycle as trucks run fewer miles, carry lighter freight and are more durable.

“The reason one mode will do better than others is the type of freight they haul,” Labbe said.

Costello said that he doesn’t expect any significant shifts of market share between trucks, trains or other modes because only about 13% of all freight moves more than 500 miles, at which point railroads become more competitive with trucks.

The survey assumes no major changes in freight regulation or capacity limitations on any mode.