Bob Costello, chief economist with the American Trucking Associations (ATA), expressed a grim economic outlook for the balance of the year, but hinted at some opportunities and relief in the near future.
“This is a unique cycle,” he told attendees at the Isaac Instruments user conference. “That was the party, now it’s the hangover.”
As Truck News’ James Menzies reports:
The good news is Costello said retail inventories are mostly worked through. Excess inventories were serving as a headwind to truck freight.
“That is a great thing for trucking that is going to be the gift that keeps on giving,” Costello said of nearshoring activities. Look no further, he said, than to rising cross-border truck volumes at U.S.-Mexico crossings, even as overall freight demand diminishes. And major factories being built for semiconductor production in the U.S. itself.
Costello said the U.S. for years has “exported” its inflation, by moving production to low-cost China. As it brings production back to North American shores – even in Mexico- – those costs will likely rise, making it difficult to keep a cap on inflation.
Meanwhile, significant capacity has left the industry, but more needs to do so before there’s equilibrium in the market.
“The trucking market is not going to turn because of demand. It’s a supply side story all the way,” Costello said. “The data shows there is a significant amount of capacity leaving the industry. By spring of next year, I think things will feel better in the industry even if demand doesn’t pick up that much, because more supply is leaving.”
While the driver shortage has softened this year, he added getting quality drivers remains a challenge for fleets. He anticipates the U.S. trucking industry is short about 60,000 drivers.
Full story here.