Probability of recession in 2016 small, say analysts

Speaking as part of the Truckstop.com Connected user conference Tuesday, Nov. 10, Noel Perry of the FTR firm noted that it would a historic event indeed if the United States’ broader economy made it through year 2020 without an actual recession. “The longest recovery we’ve had since 1945 last nine years,” he said. We’re beginning year seven of the current recovery, though it’s been marked by fairly tepid growth by and large. “If we get to year 2020 we have to have an unprecedented historical event – a recovery lasted 10 years. The probability is near zero.”

John Larkin, Managing Director of Research with Stifel, concurred that “we’re overdue for” a recession considering past experience.

Carriers would do well in this time to “go long” with their shippers, focusing on solidifying relationships and providing unique value, Perry and fellow panelists noted.

Now it not the time to put large capital expenditures into the business “unless you can get a return in two years,” Perry said. “Keep your cash flow solid – go long on relationships with your customers.” When the recession hits, you’ll be the “guy to get the freight, not your competitor.”

Gail Rutkowski, who represents a variety of shippers as executive director of the NASSTRAC organization, echoed that sentiment. “Shippers have long memories,” she said. “They remember who helped them out, and who didn’t. All the technology in the world never places that relationship – and it works both ways. You’ll expect the same kind of respect and attention from the shipper as they would from you.”

Perry’s gut feeling on the probability of recession, based on indicators he’s seeing in economic statistics, he put at 15-20 percent for year 2016. “By 2017, 60 percent. By ’18 – 80-90 percent. You should begin to think about it. Once we get into ’17 and ’18 it becomes a realistic issue.”

Next recession could hit as early as late 2016, say analysts

FTR Associates' "state of freight" seminar/Q&A reflected readers' recent suggestions that owner-operators ought to start the belt-tightening now to prepare for a cyclical economic downturn ...

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