I dialed in to the most recent of the always-informative State of Freight Webinars hosted by FTR Associates and if I was hoping it would brighten up my day, well, I was wrong. Noel Perry, managing director and senior consultant with FTR, warned...
I dialed in to the most recent of the always-informative State of Freight Webinars hosted by FTR Associates and if I was hoping it would brighten up my day, well, I was wrong. Noel Perry, managing director and senior consultant with FTR, warned motor carrier executives they “Should not have high expectations for the remainder of this recovery.”
While freight growth has so far been decent through the recovery, he anticipated it leveling off as industrial production and home sales have flatlined. But more alarming than that, Noel pointed out “We are now at the point where historically, you would begin to expect a recession at some point in the next two to three years…History says recessions tend to occur in five- to seven-year increments and seven years from 2009 is 2016, so you should have in your scenario portfolio a recession in the next couple of years, regardless of whether we or anyone else forecasts it.” Recession? Really? We’re still in recovery, here, let’s not talk about another recession. Okay, he’s right about the historical trends and it’s something to keep on your radar, as depressing as it may be to think about.
The best news Noel had to pass along was that he expects diesel prices to remain relatively stable over the next year, and possibly “as far out as 2016.” He noted an onslaught of new regulations will continue to provide headwinds for carrier productivity. The new HoS, for example, necessitated the hiring of 50,000 drivers. This coupled with the fact most carriers have focused on improving capacity utilization, means the industry no longer has the “excess surge capacity” that would traditionally enable it to easily absorb an uptick in freight demand. As a result, any spike in volumes will likely translate into pricing increases. Take that and run with it, because that’s the most encouraging news Noel had for us. For another snippet from the Webinar, check out the Worth Repeating item in this newsletter. And you can watch for a full report on this Webinar in the January issue as part of our overall industry outlook for 2014.
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