Freight to Bounce Back Stronger Than Economy

Over the long term, freight is expected to grow at a stronger pace than the U.S. gross domestic product, said Paul Bingham, managing director of global commerce and transportation at IHS Global Insight.

During the Southern California Transportation & Logistics Summit, presented by California State San Bernardino's Leonard Transportation Center last week in Ontario, Calif., Bingham presented IHS Global Insight's economic forecast for the freight industry. According to Bingham, an economic recovery is typically strongest in trade.

During the recession, consumer spending on durable goods, such as automobiles, fell most sharply, he said. In a recovery, sales of durable goods tend to come back more strongly, and these types of commodities are shipped around a lot, Bingham said--good news for the trucking community.

A Slow Recovery

However, Bingham said the recovery will be slow. This year, U.S. GDP growth should be 3.4 percent, while industrial production is expected to rise 4.5 percent, he said. Consumer spending still faces some headwinds because unemployment is high. While unemployment went down last month, the rate is still at 9.7 percent.

This recession was different from others because it was not only a demand recession, but also a financial crisis, Bingham said. We won't get back to the level of trade we were once at until next year, he added.

According to Bingham, Asia started its recovery last summer, while the U.S. entered its recovery in the fourth quarter of last year. Asia is poised to continue to increase its share in global growth.

While this can dampen imports, this can also make exports from the U.S. more competitive, especially with the exchange rate, Bingham said. Because of its proximity to Asia, the West Coast should benefit from the continent's expected growth, he added.

The Industry's Outlook

When asked about their outlook on the economy, attendees of the Summit had mixed feelings. Forty-three percent said freight volumes in Southern California are gradually going up. However, when asked what keeps them up at night, 41 percent said it was the sluggish economy, while 24 percent said it was the anti-business climate.