As analysts of freight trends, we expect 2011 to look somewhat uneventful after the extreme trough for freight-related demand and pricing in late 2008 and 2009, followed by a strong cyclical recovery for demand and pricing in 2010.
Generally, we expect a consistent but sluggish economy with solid but not extreme pricing trends and somewhat historically normal freight seasonality. Francois Trahan, my partner and top-ranked global macroeconomics strategist, expects a weak U.S. dollar policy to drive exports relative to imports and support rising commodity prices, including oil, despite lackluster demand.
We expect the most important freight-related changes this year to result from changes in truck driver hours and safety rules as well as likely stricter safety regulation around air cargo. With driver hours of service rules likely to tighten, and with the impending implementation of the Comprehensive Safety Analysis 2010, we expect a real but somewhat modest tightening in the supply of truck drivers this year, while driver pay per mile will likely increase to offset reduced miles driven.
We believe the combination of more universally enforced driver hours regulation (through CSA and increasing mandates for onboard computers), rising prices for tractors and tighter credit to drive market dynamics toward larger, better capitalized truckload fleets away from smaller and midsized fleets, which have been taking share over the past five years.
Although we expect this market share shift toward larger fleets to begin this year, the trend should be gradual, and will become more apparent over the next several years. In addition, look for intermodal to continue to take share from trucking as transloading increases, fuel costs rise and truck driver supply tightens.