Page 9 - Newcom

TRUCK BUSINESS NEWS
April 2016
9
Expert predicts US economy will continue to grow at slow, steady pace
US the ‘best looking house in a crummy neighbourhood,’ Larkin tells truckload carriers
ic recession,” he said. “It looks like we are going to scrape by without an (eco- nomic) recession.”
He said he believes that the most likely economic scenario for the near future is “continued slow, steady growth, because there doesn’t appear to be a catalyst to push us off a cliff into a recession barring some sort of terrorist event or external issue.”
And if Larkin is right, and the econ-
omy continues to grow at this slow place, he warned that the driver short- age will seem to suffocate the trucking industry even more so.
“The driver shortage continues to be a huge problem,” he said. “It is not going away with the slowdown in the economy. It’s no secret; the quality of drivers is declining. (We will be short) 250,000 drivers by 2022, which is rap- idly approaching.”
By Sonia Straface
LAS VEGAS, NEVADA
The US economy is growing at a snail’s pace – slow and steady – and that’s both a good and bad thing, according to industry experts.
John Larkin, marketing director and head of transportation capital markets research at Stifel, Nicolaus and Co. ad- dressed the audience at the Truckload Carriers Association’s annual con- vention March 8, to discuss what he believes is in store for the American economy in the coming 12-18 months.
He told the audience that even though things may be looking positive for the US economy because its cur- rency is getting stronger, essentially,
it is just “the best looking house in a crummy neighbourhood.”
“The US is not growing at a break- neck pace,” he said. “Our currency is strong so it makes it hard for us to export because everything we build or grow
or manufacture is 25% more expensive than it would be had the currency not taken this big powerful move.”
Larkin said that since the 2008 re- cession, the country has been unusu- ally slow in recovering; only growing at a rate of 2%.
The two major components of eco- nomic growth are population growth, which isn’t doing well, said Larkin, since
people are getting married later and not having as many children, and produc- tivity, which hasn’t been strong either.
In addition, Larkin said that from 2015-2016 consumer confidence de- clined because there is “some fear that there could be another recession forthcoming since this recovery has been very long in the tooth.”
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Could trucking costs drop a buck a mile? Industry forecaster thinks so
BLOOMINGTON, INDIANA
On the same day Google made news for patenting a driverless delivery truck, industry forecaster FTR predicted trucking costs could decrease as much as a dollar per mile with- in the next 15 years.
Speaking on a Webinar about the current truck market, FTR senior consultant Noel Per- ry outlined how this precipitous drop in transportation costs could become a reality.
“We are convinced very strongly that a digitally-fuelled technological revolution will dramatically reduce the cost of trucking and expand capacity at the same time,” Perry said.
He predicts trucking costs could go from about US$2.20 per mile today to about $1.20 per mile in 2030.
“We think this revolution is equally important to the economy of the US as the invention of the super-highways in the 1950s,” he said. “This is a big deal.”
Perry said there are three enablers at play: autonomous vehicles that may be able to de- liver product without drivers; greater access to information, which will reduce downtime and waste, allowing trucks to operate around the clock; and the arrival of larger, heavier trucks which will be allowed due to the increased safety brought by automation.
“We fully expect that as highways are automated, larger trucks will be allowed,” Perry said. “Not only do you get better labour productivity and asset productivity but the trucks get bigger.”
The driver shortage continues to be a huge problem. ” John Larkin
He added that people aren’t spend- ing as much as they used to. This in turn causes the retail supply chain
to become sluggish and suppresses transportation demand.
“People really aren’t spending
what they’re saving at the gas pump,” he said. Though people may not be spending as much, Larkin said that he doesn’t see a recession in the future.
“The rule of thumb here is all eco- nomic recessions are preceded by freight recessions, but not every freight recession predicts an econom-
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