This Editorial appears in the March 28 print edition of Transport Topics. Click here to subscribe today. Trucking took one step forward last week and two steps back. That shows what a tough business this is, as if everyone who reads Transport Topics doesn’t already know that.
The step forward was a slight break in fuel prices. The national retail price of diesel dipped ever so slightly — down a tenth of a cent to an average of $3.907 — barely enough to notice, but welcome relief from the unrelenting upward march of diesel prices over the past several months. Retail fuel prices pretty much follow the price of crude oil, which has been rising along with the world’s recovering economy, and then skyrocketed up when revolts in the Middle East turned into civil war in Libya.
Libya is a small but significant supplier of crude to Western Europe and the United States, and even a complete loss of crude from that nation could easily be made up by Saudi Arabia. But markets being what they are, a hiccup in Libya became pneumonia on Wall Street.
The steps backward could be a one-off, or they could be an ominous sign for trucking: Sales of new houses in the United States plunged nearly 17% in February, while new orders for durable goods took an unexpected 0.9% tumble in the latest economic news from the Commerce Department.
Housing and manufacturing are two major sources of business for trucking, and with the Federal Reserve pushing interest rates down and the federal government trying to stimulate consumer spending, there’s been hope that the economic recovery would shift into a higher gear, providing a more solid basis for growth — growth that executives in our business can depend on as they struggle to decide whether to invest in expansion or remain hunkered down.
American Trucking Associations said in its most recent report that truck tonnage increased in February from a year ago, and it looks like the freight gains, combined with the sharp cutback in capacity during the recession, are allowing carriers to raise rates.
That’s welcome news because it’s been several extremely tough years in the trucking business, but, as usual, there are some very worrisome clouds on the horizon: The turmoil in the Middle East and North Africa is far from resolved and continues to threaten the supply of crude oil from that region. Japan’s three national tragedies — the earthquake, the tsunami and the reactor explosions — threatens the status of the world’s third-largest economy, with unknown consequences for North America.
