The American Trucking Association (ATA) recently released its projections for the industry, stating it to be strong for at least the next 18 months. The chief economist at the ATA, Bob Costello, noted that three major factors have come together to provide a solid future for the freight industry: strong online sales growth, low unemployment and booming housing starts. In fact, Costello told a group of investors via a conference call that not since 2010, when the country was recovering from the recession, have these factors come together to provide a concrete environment.
Future Projections
At the present, Costello projects that the trucking industry could continue to see strong growth throughout 2019 and beyond. Much of this positive climate after 2019 depends on the resolution of negotiations with Canada and Mexico over the North American Free Trade Agreement (NAFTA) as well as other factors.
Costello noted that the trade prompted by NAFTA is of great importance to the trucking industry. About $6.6 billion in revenue each year is supported by NAFTA trade, as the overwhelming majority of goods going across the Mexican and Canadian borders get there via truck. In terms of NAFTA trade alone, it supports about 31,000 annual truck driver jobs. Costello predicted that if there isn’t a NAFTA deal in place by early June, expect the Trump administration to pull out of the trade agreement altogether.
Driver Shortage
Costello also noted that the driver shortage could impact the trucking industry. In 2017, the industry lacked about 50,000 drivers. If the current trajectory continues, that figure could rise to a shortage of 175,000 drivers by 2026.
Economic Changes
The ATA estimates that over 70 percent of the United States’ freight in terms of volume is moved by the trucking industry. This means earnings of more than $676.2 billion in revenue annually. Freight volume is also rising. Though almost no growth in freight volume was recognized in 2016, it shot up more than six percent in 2017, according to year-over-year figures. In 2018, a comparison of the figures from the same time period in 2017 indicates that the number of loads is up by 5.4 percent.
Full truckload carriers continue to see a decrease in the number of miles that are driven per load. A changing supply chain with retailers increasing the number of distribution centers is largely responsible for the change, which dropped 34 percent to an average of 524 miles per haul. Freight rates continue to increase as well. In 2017, the revenue per mile, on average, rose 3.5 percent. The first two months of 2018 saw freight rates jump by 15 percent per mile.
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