Truckers: Economic uncertainty top issue

The message from a trucking conference held this week in Texas is that national economic certainty remains the biggest issue facing the trucking industry — although the industry’s chief economist says freight demand suggests the nation may avoid entering another recession.

Bill Graves, president and CEO of the American Trucking Associations, said he remains optimistic about the industry despite the headwinds of a tough national economy. The ATA held its Management Conference and Exhibition in Grapevine, Texas.

“In Phoenix I told you that we’d weathered the storm of Katrina in New Orleans in 2008, bet on some recovery in 2009 in Las Vegas, were starting to see the economy ‘rise’ in Phoenix and we could count on bigger and better things by the time we met here in Dallas,” Graves said in an ATA statement. “Little did I know that ‘bigger’ was going to be the size of the federal debt; ‘bigger’ was going to be the unemployment rate and ‘bigger’ would characterize the number of government regulations our industry would be facing.  And ‘better’ – well ‘better’ is apparently caught up in some sort of political traffic jam and just hasn’t been able to get here yet.”

TRUCKING IMPACT
According to the ATA, trucking serves as a barometer of the U.S. economy, representing nearly 68% of tonnage carried in 2008 by all modes of domestic freight transportation, including manufactured and retail goods. Trucks hauled 8.8 billion tons of freight in 2009. Motor carriers collected $544.4 billion, or 81.9% of total revenue earned by all transport modes.

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.

In the Fort Smith region, more than 1,000 good-paying jobs are tied to the trucking sector from employment with Fort Smith-based Arkansas Best Corp. and Van Buren-based USA Truck Inc.

INDUSTRY OPTIMISM
Graves said he was still optimistic about the economy and trucking’s future, despite “frustration with Washington’s inability to come together on seemingly simple like the need to fix roads and bridges and pass a highway bill,” noted the ATA statement.

“The economy will recover. And when it does, the trucking industry is going to be one of the ‘first in line’ beneficiaries,” Graves said.

When the economic recovery will arrive remains “muddled,” according to ATA Chief Economist Bob Costello. Costello said the trucking industry will face softening freight demand and rising costs, but capacity (competition) should remain tight.

“Right now, freight demand is moving sideways, rather than falling off a cliff like it did in 2008,” Costello said. “That indicates to me that we might just skirt by another recession.”

Costello said the high operating costs and slim margins will continue to favor the larger trucking companies. The inflation rate for items like fuel, equipment and driver wages are exceeding the inflation rate for the broader economy, according to Costello.

“No one is doing great, but it feels like larger companies and shippers are outperforming small businesses right now,” he said.

INDUSTRY THREATS
Released in conjunction with the trucking conference was a report from the American Transportation Research Institute (ATRI) about the top 10 critical issues facing the North American trucking industry. Judy McReynolds, president and CEO of Fort Smith-based Arkansas Best Corp., is on the 15-member ATRI Board of Directors.

For the third consecutive year, national economic uncertainty topped the list.

“Worry over the fragility of the economic recovery is exacerbated by an unsettling barrage of bad financial news in Europe, threats to global oil supplies in the Middle East and northern Africa, and a gridlocked domestic political climate,” noted the ATRI report.

Proposed changes to federal commercial driver Hours-of-Service rules are the second biggest concern in the trucking industry.

The top 10 concerns are (with 2009 position):
1. National economy (1)
2. Hours-of-service rules (4)
3. Driver shortages (5)
4. Compliance, safety and accountability rules — CSA (2)
5. Fuel issues (6)
6. Traffic congestion
7. Transportation funding (7)
8. Tort reform
9. Onboard truck technologies (8)
10. Truck size and weight (10)