US Economy, Trucking Poised for Strong 2021, Economists Predict
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The U.S. economy and trucking are poised for a strong second half of the year and into 2022, now that a third COVID-19 vaccine, by Johnson & Johnson, has been approved and the number of people receiving doses has increased to more than 1.65 million per day.
“Reaching a sustained recovery by early 2022 is contingent on the speed and efficacy of vaccinations by mid-2021. There is light at the end of the tunnel, but it will take time, with ‘proper’ benefits to come as more people are vaccinated successfully,” Rajeev Dhawan, director of the Economic Forecasting Center at Georgia State University said at the school’s economic forum Feb. 25. “We must relearn to walk before we can run again after this major biological shock rattled economic foundations.”
It’s been one year since the U.S. economy fell into a deep recession in late February 2020 as the COVID-19 pandemic put tens of millions of people out of work, and the nation’s gross domestic product fell by 31.4% in the second quarter on an annual basis, only to bounce back in the third quarter and increase 33.4%.
Costello
Analysts, including American Trucking Associations Chief Economist Bob Costello, now are forecasting that in 2021 the U.S. economy may grow by a more sustained rate of 5% or more as unemployment drops, more Americans are vaccinated, and confidence builds about the overall health of the economy.
“I do think the economy is going to grow and accelerate, with more vaccinations and more stimulus, but understand it’s a more complex formula for trucking,” Costello said. “If more people are vaccinated, and we are starting to travel, and we are going to meetings, and we are going on vacations, that’s less money we have to spend on goods, which has been great for trucking. Freight is not going to fall off a cliff, but it’s a more nuanced answer.”
Much of the trucking industry’s surge in 2020 was caused by the explosive growth in e-commerce. Millions of people working almost exclusively from home shifted their spending patterns from traditional brick-and-mortar stores to online.
Dhawan
Georgia State’s Dhawan forecasts similar growth for the economy, believing GDP will reach 4.9% this year, 3.9% in 2022 and 2.9% in 2023.
“The real recovery depends on people feeling comfortable in interacting with each other — eating out, attending meetings, going to movies and concerts, and sightseeing,” he said.
If the economy hits the numbers predicted by Costello and Dhawan, that will exceed the 10-year average of 2.26% annual growth from 2010-19.
Economist Stephen Burks, an LTL driver in the 1970s and ’80s, has a deep understanding of fleets and drivers’ day-to-day operations. Now a professor at the University of Minnesota-Morris, he believes the shift to e-commerce and the congestion at the nation’s ports will keep the trucking economy strong for several months.
“Things are pretty clamped up at the ports,” Burks said. “The ports were already overwhelmed because of the heavy volume of imports. The demand for goods was pulling in a lot of volume, and then it was exacerbated because a bunch of the longshoremen came down with COVID.
Everyone seems to say the backlog at the Port of Los Angeles and Long Beach is the highest they’ve ever seen.
Stepen Burks, Minnesota-Morris professor
“Both the demand and COVID are playing some role. Everyone seems to say the backlog at the Port of Los Angeles and Long Beach is the highest they’ve ever seen.”
At Los Angeles, officials said the week of Feb. 21, 800 longshoremen, or 10% of the skilled workforce, were out sick because they either had COVID-19 or they had been placed into quarantine after being exposed to the virus. That same week, more than 50 ships were docked in San Pedro Bay — the entrance to the two facilities — during the busiest days.
Executive Director for @PortofLA Gene Seroka states around 800 out of 15,000 dock workers in Southern California have been vaccinated against the coronavirus — but more needs to be done on #SquawkBoxAsiahttps://t.co/1GJZgUQw6c — CNBC Int'l PR (@cnbcipr) February 18, 2021
During the last three months of 2020, several major ports on both coasts set records for volume, causing extensive delays for trucking.
“[Georgia Ports Authority] saw a 25% increase in traffic in November and December, and a double-digit increase in January,” Minnesota-Morris’ Burks said, “and they expect traffic to be very high in February. And these tend to be slower months.”
Fleets say that with the capacity tight and economists predicting 2021 will be the first of several years of growth, now is the time to move as much freight as possible and improve their balance sheets.
Yellow Corp. CEO Darren Hawkins told Transport Topics after the fourth-quarter earnings call earlier this month that’s his company’s strategy moving forward.
“The tightness in capacity is not going away,” Hawkins said. “The pandemic is still present, and at any given time, there are quarantines, exposures and that takes drivers out of the seat. And demand is still very robust.
“The consumer is focused on goods because of the pandemic, away from services, and that’s a lift for trucking, and you take the port situation, capacity is very tight.”
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