economic & trucking update 9 bob... · 2020-03-03 · economic & trucking update february...
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Economic & Trucking UpdateFebruary 2020
Food Shippers of America
Bob Costello
Chief Economist &
Senior Vice President of International Trade Policy & Cross-Border Operations
American Trucking Associations
@ATAEconBob
Economic Forecast Highlights• Economic expansion is the longest in history, but growth continues to moderate.• GDP growth slows to 2.1% in 2020 from 2.9% in 2018 and 2.3% in 2019.• Consumer fundamentals remain good, including a solid job market. Retail sales
at high levels, but growth continues to slow this year.• Housing starts are picking up and 2020 starts will reach the highest level in over
a decade.• Manufacturing sector is in a recession, but output will post some growth in the
second half of the year if China meets their U.S. factory import commitments.• After reducing interest rates three times in 2019, Federal Reserve will remain on
pause in 2020 – Unless growth weakens from external factors. • Threats: Coronavirus and election year concerns.
0 20 40 60 80 100 120 140
Average
June 2009 - Current
November 2001 - December 2007
March 1991 - March 2001
December 1982 - July 1990
July 1980 - July 1981
March 1975 - January 1980
November 1970 - November 1973
February 1961 - December 1969
April 1958 - April 1960
May 1954 - August 1957
October 1949 - July 1953
Months
Bu
sin
ess
Cyc
les
128
U.S. Expansions Duration
Sources: National Bureau of Economic Research and ATA
67
Real Gross Domestic Product Growth
Sources: BEA & ATA
2.6%
1.6%
2.2%
1.8%
2.5%
2.9%
1.6%
2.4%
2.9%
2.3%
2.1%2.0%
0%
1%
2%
3%
4%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Trend growth is roughly 2%
0.0%
0.5%
1.0%
'17 '18 '19 '20 '21
Federal Fiscal StimulusContributions to 4-Qtr %
Change of Real GDP
Source: IHS Markit
Drivers of Truck Freight
Retail Sales
Sources: Census Bureau & ATA
$325,000
$350,000
$375,000
$400,000
$425,000
$450,000
$475,000
$500,000
$525,000
$550,000
201
1
201
2
201
3
201
4
201
5
201
6
201
7
201
8
201
9
202
0
Level(Millions of $)
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
(Year-over-Year Percent)
Avg2010-15 2016 2017 2018 2019 2020
Sales Growth 4.7% 2.9% 4.7% 4.9% 3.5% 3.0%
Source: Census Bureau
Retail Sales Highlights
4.6% 4.8%
3.5%
12.5%
9.6%
12.7%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
11%
12%
13%
14%
15%
2017 2018 2019
Total On-Line
Year-over-Year Percent Change
Source: Census Bureau
Retail Sales Highlights
4.6%4.8%
3.5%
4.3%4.0%
3.1%
5.9%
6.3%
4.4%
0%
1%
2%
3%
4%
5%
6%
7%
8%
2017 2018 2019
Total
Grocery Stores
Restaurants
Year-over-Year Percent Change
Housing Starts
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
(Monthly; Annualized Rate; Millions)
2016 2017 2018 2019 2020
H.S. 1.18 M 1.21 M 1.25 M 1.30 M 1.36 MSources: Census & ATA
Manufacturing Sector Highlights
Sources: Federal Reserve & ATA
2016 2017 2018 2019 2020
Output -0.7% 2.0% 2.7% 0.0% 0.1%
95
100
105
110
201
6
201
7
201
8
201
9
202
0
Factory Output(Index)
-3.0%
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
20
16
20
17
20
18
20
19
20
20
Factory Output(Year-over-Year Percent)
Trade war inventory adjustment to output
1.15
1.20
1.25
1.30
1.35
1.40
1.45
1.50
1.55
1.60
1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
Source: Census Bureau
Total Business Inventory-to-Sales Ratio(Data adjusted for seasonal, holiday, and trading-day differences, but not price changes)
Likely Optimal Range
1.30
1.35
1.40
1.45
1.50
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Manufacturing
Wholesale
Retail
Source: Census Bureau
2019 Inventory-to-Sales Ratio Trends(Data adjusted for seasonal, holiday, and trading-day differences, but not price changes)
Trucking Trends
Truckload Contract Loads vs Spot Market Loads
Sources: ATA’s Trucking Activity Report & DAT.com
0.1% 3.0% 3.2% 2.3%
8.9%
96.7%
39.7%
-31.8%
-50%
-25%
0%
25%
50%
75%
100%
2016 2017 2018 2019
Contract Spot
Includes Dry Van, Flatbed, Temp Controlled, and Tank Truck
LTL Metrics
Sources: ATA’s Trucking Activity Report
-0.7%
1.4%
3.5%
-5.2%
1.8%
0.9%
3.8%
-0.9%
-6%
-5%
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
7%
2016 2017 2018 2019
Tonnage
Shipments
U.S. Bank Freight Shipments Index
Source: U.S. Bank
-1.3%-1.6%
-2.1%
-5.9%
-11.4%-11.6%
-14%
-13%
-12%
-11%
-10%
-9%
-8%
-7%
-6%
-5%
-4%
-3%
-2%
-1%
0%
1%
Northeast Southeast West National Southwest Midwest
Includes all types of TL and LTL freight
2019 vs 2018
Industry Capacity Trends
-1.8%
0.2%
1.6%1.0%
-2.4%
1.0%
1.9%
0.9%
-5.0%
-3.0%
-1.0%
1.0%
3.0%
5.0%
2017 2018 2019 Q4 2019
Total TL LTL
For-Hire Net Tractor Changes
Source: ATA’s Trucking Activity Report
Year-over-Year Changes
Includes company and independent contractor equipment
255,828
284,000
202,000190,427
209,592
139,986
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
2018 2019 2020
Total Class 8
Tractors Only
US Class 8 Tractor Sales
Source: ACT Research
-28.9%
-33.2%
Pricing Trends
Truckload Contract vs Spot Market Pricing
Sources: ATA’s Trucking Activity Report & DAT.com
0.1%
3.5%
15.9%
-1.3%
-8.7%
15.3%
21.8%
-12.0%-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
2016 2017 2018 2019
Contract Spot
Contract is average revenue per mile x FSC
Expect Continued High Fleet Closure Rates
• Combination of higher driver pay rates, minimum pay guarantees, and soft to falling rates, especially in the spot market, will lead to:• Significant amount of industry failures/closures – First 3 quarters 2019 795 carriers
failed, 2.5x all of 2018 • Not all of the fleets that have closed their doors have been small – Celadon (2,500);
New England Motor Freight (1,472); Falcon Transport (585); LME (424); Cold Carriers (339)
• Adding to closures will be liability insurance renewals with very large premium increases.
• Overall, expect tough market into Q2. Q2 should be transition quarter with a better, not great, second half as volumes improve and supply is more balanced.
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