In The News

Economic panel extends gloomy outlook for trucking

NEW ORLEANS – A trucking industry searching for good news should look someplace other than toward the American economy, a panel at the American Trucking Associations Management Conference & Exhibition told business leaders here.

Moderator Stuart Varney of FOX News, in pointing out the particular timeliness of the annual roundtable, noted the stock exchange had fallen by 700 points by lunchtime – and the news didn’t get any sweeter for truckers during dessert.

“There is a rush to [financial] safety which we’ve not seen in a very long time,” he said. “The Dow is plunging and the credit squeeze is not over.”

Wachovia Corp. analyst Mark Vitner colored the bleak economic outlook with specifics, noting the economy had so deteriorated in the past couple of weeks that his previously prepared slide presentation had become obsolete.

Vitner likened the ongoing downturn to the 1981-82 recession – much more severe than the two “relatively mild” recessions since, and comparable in high unemployment and duration.

Unemployment could hit 8 percent, Vincent added.

But because this year hasn’t been “terrible,” at least compared to 2007, a continuing slide might not seem as dramatic as the 2000 freight crash, ATA Chief Economist Bob Costello explained.

“You don’t see that big dramatic fall, and that’s why it feels so much worse to many of you,” Costello said. “It’s just been a death by a thousand cuts.”

And he told truckers to be prepared.

“Things are going to get worse before they get better,” he said, pointing out that pending an assessment of the recent dynamics, predicting truck tonnage is a chore. “It’s going to remain volatile.”

As to capacity, “if there is a silver lining, this is the one,” Costello said.

He explained that capacity will be “tight, very tight,” once the economy improves. Of course, the lingering freight recession and high fuel costs have driven many trucks off of the American road and to overseas markets.

“It hasn’t been idled, it’s gone,” he said.

“Rightsizing” is the business word for the survivors. Truckload capacity shrank 2.7 percent in 2007, and by 1.3 percent in the first half of this year.

“Failures” is the word for carriers which have shut their doors – a couple of thousand so far this year.

“Unfortunately, I was hopeful failures would start to decelerate, but with everything going on, I think they’re going to get worse,” Costello said.

Costello also said he fears for the fall freight season, with consumers likely to be especially cautious about Christmas spending.

Vitner differed, however, suggesting the holiday spend could be better than Costello predicts.

“Christmas only comes once a year,” Vitner said.

And a gift for trucking could come by the barrel: each pricing threshold oil breaks on its present downward course makes it all the more likely for the next breakthough.

“If it breaks $70 [per barrel], I don’t know how far it will fall – but it fall will further than anyone can imagine,” Vitner said, adding that his forecast of $70 was made even before the threat of a long, hard recession.

In closing, Varney chose to bet against the gloomy predictions offered by the panel.

“I predict when we reach this time one year hence, we will be looking at the other side of the trough – at how positive we’re going to view the year 2010,” Varney said.