BLOOMINGTON, Ind. — The US economy will be slightly stronger this year than last, but freight growth will weaken.

That’s the prediction of industry forecaster FTR, which today held a Webinar entitled State of Freight: Trucking Outlook for an Uncertain Year.

Noel Perry, senior consultant with FTR, said there’s an upside scenario for 2014 that could see a capacity crisis. Capacity utilization in the US currently sits at about 98% and will reach 99% – levels not seen since the boom period of 2004 – by the end of the year. However, unlike in 2004, Perry said the build-up to that level has been very gradual, so there may not be a repeat of the capacity shortage that industry struggled with 10 years ago. This also explains why pricing hasn’t fared better in light of near record-high capacity utilization levels.

“In 2004, that jump to 99% capacity utilization came out of nowhere,” Perry said. “Industry had great difficulty adjusting to that. But we’ve been over 96% for three years now.”

US truck pricing actually softened slightly in 2013, Perry noted, even though capacity utilization was high and freight volumes strong.

But while the industry has learned to walk the tightrope of near 100% capacity utilization, Perry said it wouldn’t take much in this environment to create a capacity crisis. Currently, the economic drag on capacity is modest, but the regulatory drag significant. If the FMCSA continues to impose tighter restrictions on the industry – as it did with hours-of-service reductions in 2013 – the US trucking industry could find itself seriously short of drivers and trucks.

“Regulatory drag is becoming the long-term issue here,” Perry said. “We don’t know if the FMCSA is actually going to do what they say they’re going to do, but if they do, it will throw this capacity issue into entirely new ground.”

The FMCSA, however, has a habit of postponing implementation deadlines for its various initiatives and with that in mind, FTR is forecasting trucking rates to climb only about 4% in 2014, well below the double-digit growth that was seen last time capacity utilization hit 99% in 2004. If everything goes right for the trucking industry this year, Perry said rates could climb by as much as 8-9%.

Perry also shared some insight into how the brutal winter weather has impacted capacity. He said about half the country has been hammered by winter storms and it’s the Eastern half, which handles about 60-70% of US freight. Over the past month, weather reduced trucking’s productivity in the East by 2-5%, resulting in a nationwide capacity loss of 1-3%.

“We’re at 98% capacity utilization now. You add 2-3% to that and you get up around 100%,” Perry noted. “That puts you in a situation where the industry has great difficulty in providing adequate capacity. This has had a short-term effect. We’ll likely have a make-up period of two to three weeks.”

For the economy in general, FTR’s forecast is consistent with projections from other prognosticators, that US GDP will grow a little less than 3% in each of the next three years. This pace of growth is significantly slower than in past economic recoveries.

The good news for carriers is that fuel prices are projected – in the US, anyways – to remain steady at about US$3.90 per gallon for several more years without volatility.

Perry characterized FTR’s economic forecast as “conservative.” He advised carrier executives to “stay flexible,” noting a capacity crisis equal to or greater than the one seen in 2004 is still possible. Much of that depends on if and when the FMCSA implements the 27 new regulations currently in the works that will have an impact on trucking productivity and whether industry is able to find the manpower to keep up with the regulatory drag these new regs will create.