Freight demand and increased freight rates are boosting the U.S. trucking industry, but the dissolution of NAFTA could wipe that all out, notes ATA\u2019s chief economist Bob Costello.<\/p>\n
Speaking at NATSO Connect, Costello said the U.S. economy as a whole is \u201caccelerating,\u201d with \u201cno reason\u201d it won\u2019t continue growing in 2019, reports Fleet Owner.<\/p>\n
\u201cI\u2019ve been hearing consistently from motor carriers that this is the best January they\u2019ve ever seen\u201d in terms of freight demand, Costello noted. \u201cThis has already been the third longest economic expansion in U.S. history and by spring it will be the second longest. Usually by this point [in an economic expansion] we\u2019re starting to slow down. Instead we have the opposite happening.\u201d<\/p>\n
Additionally, tax reform plus any spending that may result from the infrastructure funding bill now being discussed is providing further \u201cshots in the arm\u201d in to the U.S. economy in terms of spurring growth.<\/p>\n
Yet, the acute driver shortage affecting the industry could keep a lid of growth.<\/p>\n
\u201cThe three biggest problems for trucking can be summed up this way: drivers, drivers, drivers,\u201d Costello said. He did add, however, the industry is adjusting to the capacity crunch in the form of higher driver pay.<\/p>\n
\u201cWhen you have a shortage of anything, the price goes up. And we\u2019re seeing driver pay go up. A lot of the rate increase motor carriers are getting are going to driver pay.\u201d<\/p>\n
Meanwhile, the threat from President Trump the U.S. could withdraw from the North American Free Trade Agreement (NAFTA) looms large. While it should be taken seriously, Costello didn\u2019t think that scenario will play out, saying the threat could be a \u201cnegotiating\u201d tactic.<\/p>\n
\u201cI\u2019m slightly optimistic that this [a pull out] is being floated as a negotiating tactic,\u201d he said. \u201cWith the Mexican presidential election in July and our mid-term [Congressional] elections in November, the odds of making a deal by this point are long.\u201d<\/p>\n
If Trump were to truly initiate a NAFTA pull out, that would occur in late March\/early April and would activate a six-month clock for dissolution of the trade deal.<\/p>\n
\u201cIt might be a ploy to get a deal done within that six months, but that would be a really big gamble. And suffice to say this is a really big deal for trucking: cross-border truck-traffic generates $6.5 billion a year for U.S. truckers. [That trade] is critical to the trucking industry.\u201d<\/p>\n