In The News

ATA economist: circumstances of current crisis make impact on trucking hard to predict

ARLINGTON, Va. — It’s hard to predict how the country’s current financial situation will impact trucking in the immediate future, a leading industry economist said today.

“If the current economic situation continues to worsen and the country is pushed into a recession, sure it would hurt the trucking industry,” Bob Costello, chief economist for the American Trucking Associations, told The Trucker.

But, he added, the real difficulty in knowing what might happen to the industry is the unknown.

“We (ATA) can’t do an economic model and put in a variable for like what happened to AIG. You just don’t model those things, which makes it more difficult to know exactly what’s out there on the horizon.”

Costello said he had already predicted a mild recession late this year or early next year.

“The developments of the past few days makes that probability even higher,” he said, adding that the present credit crunch had made it hard to borrow and that even with lower interest rates, Americans were still not really wanting to go into debt.

Among the unknowns is how the recent economic news might impact ATA’s advanced seasonally adjusted For-Hire Truck Tonnage Index.

The association reported recently that the expected summer freight slowdown had arrived on schedule in July, but the slow and steady improvement over last year had continued.

The teetering economy, however, offers no guarantees that truckers will have the loads they need through the end of the year, the ATA noted.

The index decreased 0.3 percent in July, marking the first month-to-month drop since April. The seasonally adjusted tonnage index equaled 116.2 (2000 = 100) in July, while the not seasonally adjusted index fell 0.1 percent to 119.7.

The seasonally adjusted index was 4.4 percent higher compared with July 2007, marking its ninth consecutive year-over-year increase, although the gain was a full percentage point lower than the improvement in June.

Year-to-date, the index was up 3.6 percent compared with the same period in 2007. Tonnage contracted 1.7 percent and 1.5 percent in 2006 and 2007, respectively.

Costello said in the report that July’s tonnage reading matched several anecdotal reports from motor carriers that freight was softer in July than the previous month. Costello cautioned that truck tonnage could be volatile in coming months because the economy is expected to further soften before improving. However, slight declines in fuel prices and tightening capacity could help offset softer freight volumes.

Today, he reminded the industry that the good news is that when the economy turns upward, trucking would be among the first to feel it.

“We’re the first to feel it when it goes bad and the first to feel it when it turns upward,” he said.