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Trucking Industry Has Sunny Road Ahead

by Jana Ritter - Published: 6/27/2013

On Wednesday, the American Trucking Associations released the latest edition of its U.S. Freight Forecast to 2024. Not only does it project overall freight revenue to grow to $1.3 trillion annually in 10 years, the forecast also shows the trucking industry will see its share of this revenue rise as well.

Sunny roads

The Forecast is a collaboration of reports between ATA, IHS Global Insight and Martin Labbe Associates. It lays out the current state of the freight economy where trucking strengthens its position as the leading mode of transportation. “The trucking industry continues to dominate the freight transportation industry in terms of both tonnage and revenue,” said ATA Chief Economist Bob Costello. He notes that Forecast projects trucking’s share of tonnage will rise to 70.8% by 2024 from 68.5% in 2012.

Specifically Forecast calculates that overall freight revenue will grow by 63.6% to $1.3 trillion annually in 2024 and trucking will see its share of those revenue rise to 81% from 80.7% in 2012. Truckload volumes will grow 3.2% through 2018 and 1.1% annually between 2019 and 2024. Less-than-truckload volume should grow 3.5% annually through 2018 and by 2.4% until 2024.

Anemic growth for rail carloads of just 1.5% through 2018 and 0.4% from 2019 through 2024 contributing to a decline in market share to 14.2% from 14.8% in 2011. Intermodal rail will continue to be the fastest growing freight mode, growing an average of 5.1% a year until 2018 then slowing moderately to 4.8% annual through 2024. Other modes of transportation, including airfreight, waterborne transportation and pipelines will see moderate volume and revenue growth.

Mike Cronin, executive vice president of Dayton Freight Lines Inc., said the trucking industry's growth should be better than ATA projects. What's holding it back, Cronin said, is that the industrial sector isn't as brisk as it really should be by now. In addition, growing regulations on trucking threaten to drive up cost and create more workforce problems.

But in terms of business, motor carriers have a sunny road ahead. In addition to the substantial hike in freight volumes over the long-term, the more immediate forecast predicts an increase per “takeaway” according to Stifel Transportation & Logistics Researchlarger. Truckload carriers are forecast to secure rate increases that outrun the rate of cost increases.

John G. Larkin, Stifel managing director adds that “{… truckload appears to be right on the cusp of a capacity shortfall. With tightening supply and demand, the potential for improved rate increases improves and we think that rate increases will then once again outstrip the rate of cost increases, especially for large, purchasing advantaged truckload carriers,” Larkin explains.