An Economy Fueled By Trucking

According to a recent report by the Commerce Department, the United States economy grew by an annually adjusted rate of 2.3 percent in the period between April and June. The growth was led by strong consumer spending, exports, and home construction.

Since we all know the trucking industry fuels national commerce, the fact that personal consumption expenditures grew at a 2.9 percent annual rate is very encouraging. Add to this that crude oil costs less than half what did a year ago, and you have a perfect recipe for continued expansion.

But while certain sectors of the economy are doing well, how does this report bode for trucking as a whole? Fortunately, the outlook is good. Let’s take a closer look at the numbers.

Trucking’s Economic Indicators

As people dissect the economic indicators, it’s easy to overlook trucking’s contribution. Don’t discount it however, because recent statistics show that there is a strong correlation between the trucking industry and an economic recovery.

In fact, trucking is the fourth largest contributor to the nation’s GDP behind housing, food, and health care. More trucks are on the roads means more goods are being sold and shipped. This travels on down the line, translating into more work for factories and more raw materials produced.

According to the latest report from the Bureau of Economic Analysis, transportation and warehousing jobs increased by over 17,000 jobs in June. Trucking by itself delivered 7,000 new jobs.

During the past three months, trucking has added 19,000 new jobs and over the past year has added 43,300 jobs. These are staggering numbers for an industry once at the precipice a short six years ago.

The Rising Tide

This new data dovetails nicely with the increases in warehousing and storage industry jobs. That particular segment added almost 28,000 jobs over the past year. And although trucking led the way, warehousing and storage were no slouches, adding 2,800 jobs.

Jobs supporting trucking and associated categories grew by 2,700. Combine all three categories together and you are looking at almost three-quarters of all sector growth in June.

According to a recent report compiled by the American Trucking Associations (ATA) and Journal of Commerce (JOC), annual trucking revenue reached $700 billion for the first time ever in 2014. This number represents a full 3 percent jump over 2013 numbers and a 28.7 percent jump over 2009 levels, when the recession hit trucking hard, dropping industry income to $544.4 billion.

Rates, Volume, Capacity

Although higher rates do account for a portion of the income gain, the report shows most of the uptick is due to heavier freight volumes. Bob Costello, Chief Economist for the ATA, noted that “increases in freight, combined with tight capacity, helped drive revenues.”

Indeed, freight volumes in 2014 rose sharply. It appears economic growth is finally showing itself in the form of an improving trucking sector.

It’s also important not to forget how capacity plays into the picture. The recession resulted in a lot of operators going out of business. The resulting capacity squeeze is directly related to the employment squeeze.

The Industry Revs Up

Now that demand is picking up, carriers are beginning to update their fleets. According to the transportation research firm FTR, orders for North American Class 8 trucks rose to 375,000 units, making 2014 the second-best year on record for truck sales.

But although the numbers are positive, remember that we still have a ways to go. The 83.4 reading in trucking capacity for 2014, though impressive, is still a full 17 percent lower than its 2006 peak value.

Considering trucks account for 80.3 percent of all freight spending while moving 9.96 billion tons of cargo, it appears these numbers will only grow as the economy continues to improve.

Fortunately, there are few bad indicators in any of these reports. No matter what happens in the long-term, it appears that trucking has finally recovered from the Great Recession and is doing its part to drive economic growth and keep the supply chain moving like a well-oiled machine.

from Quick Transport Solutions Trucking Blog http://ift.tt/1UpB9yT

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