Report predicts encouraging trucking trends to 2021

A recent study released by the American Trucking Associations’ predicts a 25% growth in U.S. freight tonnage by 2021 — good news for trucking companies able to survive the current economic misery.

The “ATA U.S. Freight Transportation Forecast to 2021” also predicts freight revenue will grow 69% by 2021, with the trucking sector’s share of all freight moved rising from 68% in 2009 to 70.7% in 2021.

“However, that positive outlook is set against the backdrop of the recession; the nation’s freight pool contracted by almost 12.5 percent in 2009,” noted the ATA statement.

The trucking industry can expect its share of total tonnage to increase gradually from 68 percent in 2009 to 70.7 percent by 2021. Trucks hauled 81.9% of freight tonnage by revenue last year.

The ATA report also notes that railroads’ overall share of total tonnage will slip slightly from 14.7% to 14.1% by 2021. Air cargo tonnage may grow from 11.7 million tons in 2009 to 18.4 million tons in 2021.

“All modes of freight transportation were impacted by the ‘Great Recession,’ but I’m growing more optimistic about the long-term outlook,” ATA Chief Economist Bob Costello said in the statement. “There are certainly some risks, but I think better days do lie ahead for the freight hauling business.”

David Humphrey, vice president-investor relations and corporate communications for Fort Smith-based Arkansas Best Corp., and Lane Kidd, president of the Arkansas Trucking Association, say the 2021 predictions are reasonable.

“Predicting the economic future can be a little like predicting the weather but there are strong signs out there that the U.S. economy is starting to pick up and trucking companies are moving more freight,” Kidd said.

Arkansas Best, the parent company of less-than-truckload carrier ABF Freight System, has been hard hit by a freight recession that began in late 2006. The company, which employs about 9,500 nationwide, posted a 2009 net income loss of $127.52 million, compared to a $29.168 million gain in 2008. However, the 2009 income loss includes a non-cash accounting charge of $64 million for the impairment of goodwill. Total revenue in 2009 was $1.472 billion, a 19.6% dip from 2008 revenue of $1.833 billion.

The next few quarters are expected to be financially difficult, but Humphrey said conditions are improving and the company is cautiously optimistic.

“We are encouraged by the recent improvements in our year-over-year tonnage trends but we are very cautious about believing that we are in the midst of a full economic recovery. Because we are at such low levels, these business increases are good but they need to continue in a significant and sustained manner,” Humphrey explained. “You have to crawl before you walk and hopefully in the near future we can look back on the current period and be able to say that this was the beginning of a meaningful recovery in our economy and in our business.”

Kidd said anecdotal reports indicate an improving freight environment.

“I sense more confidence among trucking executives today than at anytime in the last three years. The U.S. business community will only stay down so long before new innovations and new products emerge that get the consumer back in the game and that is ultimately what moves this economy – buying,” Kidd said.

The 2021 forecast report suggests that consumer spending will grow by a moderate 2.5% per year during the next decade, and the unemployment rate will remain at 6.7% by late-2015.

According to the ATA, trucking serves as a barometer of the U.S. economy, representing nearly 69% of tonnage carried in 2008 by all modes of domestic freight transportation, including manufactured and retail goods.

The trucking sector is important to the Arkansas economy. Arkansas and Nebraska are tops in the country in in terms of percentage of total state employment being in the trucking sector, according to the ATA trends. In Arkansas, 3.7% of all people employed in the private sector worked for a trucking company, with 3.6% for Nebraska. California and Texas have the most people working in the trucking industry in terms of total numbers.