Cargo Business News

February 2013

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14 T TruckingTrends By Mark MonTague Upbeat signs for I���m an optimist by nature, but I���m also a numbers guy. Given the data I���m seeing from the American Trucking Associations and others, it���s hard to feel sunny about freight volumes and market conditions. The fourth quarter of 2012 was a disappointment due to slowing industrial production, the eight-day port strike at Los Angeles and Long Beach; disruptions from Superstorm Sandy; and lower-than-expected retail holiday sales. In the end, the volume of goods moved in 2012 exceeded that of 2011 by about 3 percent, and the evidence is that inventories rose, which may further throttle down production. The first quarter of 2013 could bring more bad news. Many companies didn���t know how to plan staffing levels given the political uncertainty, so it looks like a slow start. We may even have a decline in GDP below the anemic 0.9 percent preliminary estimate for the fourth quarter. The sluggish economy has affected truck capacity and costs. The average age of a Class-8 truck in the United States is nearly seven years, and the maintenance and driverretention costs are choking carriers. There were 194,715 new trucks sold in 2012, a 13.6 percent increase over the 2011 total of 171,358, but the market failed to exceed the 200,000 mark for the sixth consecutive year. It was on track until November and December, when sales plummeted 28.8 percent compared to the same two-month period last year. Positive Trends There are a few important, positive trends that should help to get the economy back on track���and keep it there���by Q2 2013. Here is my short list: 1. energy New shale oil and natural gas resources are being discovered and tapped, and the February 2013 www.cargobusinessnews.com United States is on track to become a net exporter of fuel in the coming years. The impact of increased domestic supplies has benefits on several fronts. For years, trucking Energy prices will drop, which will boost manufacturing and add companies have high-paying jobs nationwide and lead to positioned themselves accelerated growth in construction of new to ramp up operations infrastructure. Trucking benefits when energy prices in Mexico. drop, even if the impact on diesel fuel is slight. Long-distance trucking has been losing out to rail intermodal and this shift should slow with lower diesel costs. Plus, natural gas is gaining interest as an alternative fuel. ��� ��� 2. exports One major trading partner had a rapidly growing economy and a hunger for American products last year: Mexico had 6 percent GDP growth in 2012. Mexico is investing in highways and other infrastructure, and is well positioned to absorb U.S. goods and provide near-sourced manufact-uring and logistics support for American businesses. For years, trucking companies have positioned themselves to ramp up operations in Mexico. A few Mexican trucks are crossing into the U.S., but most freight is still transferred at the border, creating new opportunities for carriers of all sizes in Southern California, Arizona, New Mexico, and Texas. Reefer carriers have been working those markets, hauling inbound freight during produce season, but expect an increase in van, flatbed, and specialty freight, with growing volume in both directions. 3. emotion Americans are weary of talk about a dragging economy. Yes, there are looming fights over the government���s borrowing limit and spending cuts. But the world didn���t end on December 21, as the Mayans predicted, and the uncertainty surrounding the fiscal cliff didn���t topple the economy. Housing starts have jumped to their highest level since June 2008. Permits for future home construction were also the highest in more than four years. Payroll taxes are going up and top earners will pay more on income and

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