Carriers and owner-operators who have survived the recession should be well positioned for a modest rebound, economist Bob Costello told fleet executives at the Randall Trucking Symposium in Tuscaloosa, Ala.
However, spiraling insurance costs still threaten the industry, said Costello, chief economist and vice president of the American Trucking Associations.
Driven by gains in personal spending, government spending, exports and imports, the gross domestic product grew 5.8 percent in the first quarter of 2002 from a year earlier. However, business spending fell 5.7 percent in the same period, one reason trucking did not see a corresponding growth in early 2002, Costello said.
His charts showed manufacturing slowing as inventory swelled in 2001. By the beginning of 2002, inventory had leveled out, and manufacturing appeared ready to grow.
However, manufacturers are using only 74 percent of their capacity. The historical average is 83 percent, Costello said.
“Until business is convinced the recovery is real, that’s going to keep a lid on the potential for domestic manufacturing,” he said.
The first trucking segment hurt by the recession was truckload, but it’s now coming back, while less-than-truckload is suffering, Costello said. Flatbed has seen the most growth since the late 1990s, while bulk and dry van saw modest expansion of their markets. Refrigerated had the slowest growth but also the most stable.
The cost factor that has hurt trucking the most in recent years is insurance. Primary truck insurance premiums rose 17 percent in 2000, then 32 percent in 2001, Costello said. Premiums for umbrella, or extended liability, coverage rose 33 percent in 2000, then 87 percent in 2001. “It hasn’t gotten any better,” Costello said.
ATA believes the answer to skyrocketing insurance costs is legislation to limit damage claims. “Even though the trucking industry has gotten safer and safer, the average cost per claim has gone up and up,” Costello said.
Though fuel costs have moderated in recent months, their volatility in recent years continues to be a problem.
“That makes business decisions very difficult,” Costello said. “With what’s going on the Middle East, you can expect volatility in this area.”