Trucking Economist Says Conditions Could Soon Rival the “Worst of the Great Recession”
Arlington, VA – Despite an increase in the American Trucking Associations’ (ATA) advanced seasonally adjusted (SA) For-Hire Truck Tonnage Index in March, trucking economists are warning of severely difficult days ahead.
On Tuesday, the ATA released its March tonnage index report which is based on surveys from its membership.
While the index rose 1.2% in March after increasing 1.8% in February, ATA chief economist, Bob Costello, warned April is going to be quite a different story.
“March was the storm before the calm, especially for carriers hauling consumer staples, which experienced strong freight levels,” said Costello. “But there was a huge divergence among freight types. While freight to grocery stores and big box retailers was strong in March, especially late March, due to surge buying by households, freight was anemic in other supply chains, like that for gasoline, restaurants, and auto factories.”
As panic buying has long since leveled off, freight volumes have fallen sharply in recent weeks.
Combine this with widespread and continued shelter-in-place orders requiring non-essential businesses to close, and Costello says you have a recipe for economic turmoil.
“I would expect April tonnage to be very soft,” he said.
Trucking market analyst FTR Intelligence agrees.
Last week, FTR released more data detailing the decimation such policies are having on the American economy.
“Sharp declines in freight volumes, utilization, and rates due to the COVID-19 pandemic could lead to the worst overall trucking conditions on record during the second quarter of this year,” FTR said.
FTR forecasts that its Trucking Conditions Index (TCI), which tracks monthly changes in freight volumes, freight rates, fleet capacity, fuel price, and financing, will hit its lowest points in April and May.
Avery Vise, vice president of trucking, commented, “Although trucking conditions might prove to be comparable to the worst of the Great Recession, the trucking industry – like the rest of the economy – has never seen such an abrupt deterioration. While an economic restart likely will begin in May, the damage wrought during this period will weaken trucking conditions for months to come.”
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Earlier this month, Costello was among the first to sound the alarm about just how bad the COVID-19 mitigation measures were expected to impact the trucking industry.
“The vast majority of businesses are going to hurt and hurt badly. I would expect a lot of trucking failures. I hate going out and saying that, but I think you need to know that,” he predicted.
However, Costello says he remains optimistic about a strong rebound in the third and fourth quarters, especially given the nature of the financial crisis.
“This is not an economic crisis. This is a health crisis. If we can get past the health part of it, hopefully we can get a v-shaped recovery,” he recently commented.
FTR’s projections are not so optimistic.
In fact, FTR is forecasting its TCI to “remain negative well into 2021.”
President Donald Trump shares Costello’s optimism.
In a White House press briefing last week announcing new federal guidelines to reopen America’s economy, President Trump expressed his belief the economy would rebound sooner than many expect.
“I think my economic advisers are interested in the third quarter and really in the fourth quarter,” he stated. “I think we have a chance to do record fourth quarter numbers because there is a tremendous pent up demand,” he declared.