The Slowing Economy: How It Will Impact Trucking
May 26, 2000
Motor carrier employment (seasonally adjusted) fell 5,000 jobs to 1.834 million in May, after 42 consecutive months of employment increases totaling 198,000 jobs. Is this the first sign of slower growth in the economy and in freight volume?
Probably. Trucking employment should fall, given the weak reports for total employment and consumer spending in May. It is possible that the May decline will be revised away next month, since total employment in May was reported to have fallen an improbable 116,000 jobs, excluding temporary Census employees. But if not May, it will be June or July when significantly slower growth hits the trucking market.
This will be because the 5.4% GDP growth rate in the first quarter is widely expected to be halved this quarter and then to stay around 3% for several more quarters as the full impact of the 2% increase in credit costs hits the economy.
How else does the environment for trucking change with slower economic growth? These changes will be slow and gradual but will accumulate to be significant.
* New equipment prices will rise more slowly with "deals" available.
* Used equipment prices, as usual, will be hit even harder.
* The costs of recruiting and retaining long-haul drivers will ease. Thank residential construction contractors for boosting driver supply as they reduce the size of their work crews.
* The growth of imports through coastal ports will slow significantly from a 15-20% annual rate recently to less than 10%. The import surge was fueled by the 8% appreciation of the dollar over the last year. A period of slower growth in the U.S. will cut the inflow of short-term capital, which will cause the dollar to depreciate, making imports more expensive.