One of the best terms to use regarding my outlook on the economy and the trucking industry is “cautiously optimistic.”
There are undoubtedly promising business trends occurring, but challenges still loom on the horizon for the trucking industry and our nation as a whole. While analysts expect final consumer spending figures for 2010 to be up approximately 2.6 percent, recovery will still likely be slow throughout 2011 as consumers continue to restrain spending in the face of high unemployment rates and slow wage growth.
Tonnage levels improved for trucking companies throughout 2010 as businesses rebuilt recession-lean inventories. Although I’m hopeful this is a positive sign for the economy as a whole, businesses likely will moderate this buildup in 2011 as a cautionary tactic until spending trends become more predictable.
Even so, supply and demand levels have achieved a better balance recently, allowing for much-needed rate increases in the industry. Price reductions that left operators essentially carrying freight at a loss were common at the height of the recession as carriers became desperate to fill trucks. This unsustainable cost structure resulted in reduced capacity through foreclosures and terminal closings, and left some carriers with overwhelming debt.
As the trucking industry works to overcome these obstacles, driver shortages due to hours-of-service adjustments and the Comprehensive Safety Analysis of 2010, along with heightened operating expenses related to more regulation and taxation, will be a challenge. However, the recession reminded us that efficiency and fiscal responsibility must be at the top of every company’s priority list. This lesson will enable the transportation industry to survive, and possibly thrive, in whatever economic environment comes our way.