Fleet Management

Commentary: The Coming Headwinds

August 2015, TruckingInfo.com - WebXclusive

by Evan Lockridge, Business Contributing Editor - Also by this author

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The red line at the bottom of the graph on the left indicates the most recent recovery, a more gradual affair than seen in the past.
The red line at the bottom of the graph on the left indicates the most recent recovery, a more gradual affair than seen in the past.

“This recovery is getting a little stale.”

That was the comment made by economist Noel Perry last month in a conference call hosted by transportation intelligence firm FTR.

Using a simple chart, he showed how the current recovery is the weakest since World War II. That hasn’t stopped trucking from enjoyed a heaping of prosperity since the end of the Great Recession, with some fleets seeing their best times ever, but this year may not live up to 2014.

Perry cautioned that a sustained annual economic growth rate of 3% to 3.5% is not likely. FTR projects average growth next year to be just 2.5%.

“It’s unusual for recoveries to be stronger at the end more than they were at the beginning,” Perry said. “So when you read these optimistic economic forecasts saying the economy is finally recovering, you should do so with great skepticism.”

He believes there is a risk of a recession “given the perilous economic situation in many parts of the world,” but more importantly for trucking, “the freight economy does not tend to behave well late in recoveries and … we are late in this recovery.”

So when will this “boom time” be over? Two to no more than three years from now, Perry said, basing that analysis on past history. By mid 2017 to mid 2018, he said, freight is likely to grow only 1% annually, compared to 4.8% annually so far in this recession.

This is just one man’s opinion, albeit an opinion from someone is regarded highly in this industry. Like any of us, he could be wrong. There is another headwind that will hit trucking in the next two to three years that’s nearly inevitable, and could be a good news/bad news scenario. More on that tomorrow. 

Comments

  1. 1. Truckguy [ August 10, 2015 @ 09:50AM ]

    Most analysts base their expectations for this recovery on behavior of previous post-war recoveries. The problem with that is this recession was a lot more like the Great Depression, which we didn't emerge from until WWII totally altered the global manufacturing and business climate in our favor.
    Employers used the recession to trim head count. Those jobs might never come back. This combined with the demographic changes mentioned in the article mean we're in a new environment for employment.
    The Fed will probably raise rates this fall regardless of the employment outlook, and I doubt it will make much difference.

  2. 2. Tires [ August 10, 2015 @ 02:15PM ]

    Unfortunately there is another highway bill coming down the pipe, maybe they should quit spending money on unnecessary programs and they might just have enough money to take care of the infrastructure. Wasnt the bailout supposedly for infrastructure? To end on a good note, even in an Afghan warzone there are still trucks delivering goods, hopefully trucking will be one of those bulletproof industies.

 

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