Forecast Outlines Growth in Tonnage, Other Economic/Industry Trends

The future's bright looking ahead to 2021, says a new forecast from the American Trucking Associations, as total freight tonnage and trucking will grow (albeit slightly slower than the overall economy) and trucking will continue to dominate modal market share.

As the U.S. economy recovers from the worst post-war recession, freight transportation is poised for a sustained recovery as well, the American Trucking Associations reports in its new ATA U.S. Freight Transportation Forecast to 2021, released this week.

IHS Global Insight and Martin Labbe Associates, which ATA commissioned to conduct the study, project that by 2021 total freight tonnage will grow 25 percent and total freight transportation revenue will grow 69 percent. However, ATA notes, keep in mind that those numbers must make up for last year's recession; the nation's freight pool contracted by almost 12.4 percent in 2009.

The volume of freight transported in the United States is expected to grow an average of 2.6 percent per year between 2010 and 2015 and 1.3 percent per year from 2016-2021, according to the forecast.

The trucking industry can expect its share of total tonnage to increase gradually from 68 percent in 2009 to 70.7 percent by 2021. Trucks hauled 81.9 percent of freight tonnage by revenue last year.

Modal shifts

The Forecast also includes information about other transportation modes, including rail (carload and intermodal), domestic water, pipeline and domestic air.

The growth of these modes during the forecast period will depend largely on whether they haul more general freight or more bulk freight, explained ATA chief economist Bob Costello pointed out in a webinar Thursday highlighting key points in the report. General freight across all mode is expected to grow 44 percent over the forecast period, compared to only 15 percent for bulk freight. Because of that, air freight and intermodal, which carry mostly general freight, will grow dramatically - 83 percent for intermodal, 57 percent for air freight, by tonnage. Trucking is forecast to grow by 30 percent, waterborne and rail by about 14-15 percent.

Historically, rail intermodal has been growing by about 3 percent per year, and it was down 15 percent in 2009. The forecast predicts average yearly growth of an average of 6.5 percent between 2010 and 2015 and 5.2 percent from 2016-2021. "You can see why railroads like it so much; this is one area that is growing very well."

However, Costello emphasized that even with this tremendous growth, rail intermodal will still have a very small piece of the pie. In 2009, trucking had 68 percent market share by tonnage, rail carload had 13.6 percent, 6.4 percent went by water - and rail intermodal was 1.1 percent. Even with the tremendous growth forecast for intermodal, by 2021, that piece of the pie is only forecast to be at 1.6 percent.

"This is the fastest-growing of all the modes, but it remains a sliver of the pie. We in transportation understand that; unfortunately, some policymakers have a harder time understanding that. This is one of the reasons we commissioned this report. We can't no invest in roads because we think rail intermodals' going to take up all the tonnage."

In some areas, at some companies, in some lanes, we may see more of a shift to rail intermodal, Costello said. But in the big picture, he said, "It is my opinion that trucks and trains compete on a very limited basis." He pointed out that conventional wisdom is that trains only really become competitive with trucks on runs over 500 miles, and only 13 percent of all tonnage fits that long-haul model.

Vehicle population

The ATA report also looks at forecasts for the country's truck population. The forecast predicts the Class 8 truck population to grow from 2.3 million currently to 2.7 million by 2021, a 17 percent increase. Costello pointed out that about half of the Class 8 vehicle population are actually straight trucks, many of them in vocational activities such as dump trucks.

Labbe predicts that fleets will boost productivity as measured by tonnage haulers per truck per year, not average miles per truck per year. He also sees a continued reduction in the average length of haul. Replacement cycles will increase as average miles per year falls and trucks continue to become more durable. Labbe also predicts that we will see more Class 7 tractor-trailer combinations using day cabs for local, final delivery, at the expense of Class 8 tractor-trailer combinations.

Economic indicators

In addition to its projections about volume and revenue for all modes of freight transportation, the Forecast examines other key indicators for the U.S. economic outlook. Consumer spending is predicted to expand only 2.5 percent per year during the next decade, and the unemployment rate will decline, but likely remain at 6.7 percent by late-2015, two percentage points above pre-recession levels. The Forecast also examines industrial output, business investment, trade, housing starts, vehicle sales and other key drivers of freight.

The Forecast uses a 2009 baseline and projects freight tonnage and revenue by mode to 2021, as well as the number of trucks that will be needed to move the freight. This year's edition also includes historical data for all modes of freight dating back to 1990, useful for gauging growth, and revised revenue and tonnage figures back to 2003.