NASHVILLE, Ind. — The two-year old freight recession appears on the verge of hitting rock bottom, setting the stage for an incremental rebound over the next year.

Although the general economy didn’t hit a recession until late in 2008, the freight recession started the first of 2006, noted Noel Perry, founder and principal of Transport Fundamentals and a senior consultant and managing director for transportation forecasting firm FTR Associates.

According to FTR’s analysis, the Gross Domestic Product for 2010 is expected to be increase 2.7 percent.

"The profitability of the industry is at its nadir right now," Perry said in a conference call/webinar hosted by FTR last week, nothing that about half the nation’s fleets currently have operating ratios of over 100. "Even though demand will fall a little more as ’09 finishes, margins should start creeping up before then." 

Things looking up, now that the worst might be over?

"You can’t get to the recovery without first going through the bottom," Perry explained. If you look at recession patterns over the last 30 years, he said, "the economy goes through a period where it’s trying to find itself and it’s bouncing along the bottom. It’s a U-shaped recession. Everyone wants a V-shaped recession, but that hasn’t happened since 1975."

The good news is FTR analysts believe we’re approaching that bottom.

Housing starts, for instance, are way down, but they’re flatting out. Car and light truck sales are down, but not falling off the cliff anymore. Consumer expenditures are showing a bottom, and there’s even a hint of a bottom in unemployment numbers. "We have credible signs of a bottom nearing," he said, showing a list of economic indicators, mostly now heading up, whereas three months ago they were all heading downward.

"Sometime in the summer, freight volumes are going to stabilize, and that will allow people to optimize and that allows profitability to improve," Perry said.

FTR economists believe as far as the freight recession is concerned, we’ll be bouncing along that bottom for the next three quarters before freight catches up with improved GDP numbers. Although most economists expect to see the general economy start showing slight GDP growth in the third quarter, the FTR freight forecast shows freight growth starting in the first quarter of 2010.

— via Truckinginfo.com