Tight Truck Outlook

GRAPEVINE - Oct 17/11 - SNS -- The U,.S. trucking industry is facing softening demand and rising costs, but fleet capacity will remain relatively tight, cautions the American Trucking Associations' Chief Economist Bob Costello.

"Right now, freight demand is moving sideways, rather than falling off a cliff like it did in 2008," Costello said during the All Eyes on the Economy panel, presented by Bendix Commercial Vehicle Systems. "That indicates to me that we might just skirt by another recession."

In general, Costello said large fleets were seeing stronger volumes than smaller ones, likely because of their relationships to larger shippers.

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

In addition, Costello said that cost pressures on fleets were "significant," with the inflation rate for items like fuel, equipment and driver wages exceeding the inflation rate for the broader economy.

Despite higher costs, Costello said that truck and equipment manufacturers should continue to see solid sales figures "because there's a significant amount of pent-up demand for new trucks to renew aging fleets."

Even set against this backdrop, Costello said fleets should continue to see solid revenue per mile as capacity stays tight.

"There has been some growth in capacity, but supply and demand remain close to equilibrium," he said. "However, fleets did a good job ‘right-sizing' during the recession, so capacity should remain tight – and continue to tighten as the driver shortage worsens."