DAILY NEWS Oct 20, 2013 5:11 PM - 0 comments

US trucking on cusp of a capacity shortage?

TEXT SIZE bigger text smaller text
By: Lou Smyrlis

ORLANDO, Fla -- US trucking is "on the cusp" of a capacity crunch, according to American Trucking Associations vice president and chief economist Bob Costello.

Costello told the popular All Eyes on the Economy panel that eventually demand for freight services will outstrip the slowly growing supply of trucks and drivers and lead to a capacity crunch that will drive freight rates upwards.

"We just need to wait till late next year or 2015. We need two or three straight quarters of 3% GDP growth," Costello said.

Costello noted that US truckload capacity is down 5.7% compared to the end of  2007 while less-than-truckload capacity is down 15%. The devaluation of the US dollar is also creating opportunities in export markets such as Nigeria and Mexico for used trucks, many with more than 800,000 miles on the odometer. That in itself is removing 1.5% of capacity per year, according to Kenneth Vieth, president of ACT Research and a fellow All Eyes on the Economy panelist.

"We are not that far off equilibrium. Capacity is going to get sucked up and things are going to get tight," Costello stressed.

Vieth provided another statistic that supported Costello's belief in a capacity crunch: Despite GDP being up 20% from 2003 to 2013, the US tractor population today is comparable to 2003. And the average age of a Class 8 truck is up to 9.8 years, compared with 8.9 back in 2003.

But the final panelist Mark Vitner, placed some cool water on those projections with his forecast of only 2.4% GDP growth for the US economy next year and 2.7% in 2015.

"If the economy is only growing around 2% and you add capacity, that's a mistake that is going to be hard to grow out of," Vitner warned.

Costello said there was an alternative route to a capacity crunch: Fleets hanging on to old trucks may go out of business.

Costello was particularly optimistic about the industry's longer term fortunes. He said population growth alone over the next decade will result in 25% more freight that will need to be hauled.

Monitor These Topics

Horizontal ruler
Horizontal Ruler

Post A Comment

Note: By submitting your comments you acknowledge that Truck News has the right to reproduce, broadcast and publicize those comments or any part thereof in any manner whatsoever. Please note that due to the volume of e-mails we receive, not all comments will be published and those that are published will not be edited. However, all will be carefully read, considered and appreciated.

Your Name (this will appear with your post) *

Email Address (will not be published) *

Comments *

* mandatory fields