This Editorial appears in the Jan. 2 print edition of Transport Topics. Click here to subscribe today. There is reasonable cause for people in trucking to be optimistic in 2012. It looks like the economy’s recovery from the long and deep recession is gaining strength, so trucking can look forward to increasing demand.
Gross domestic product is still growing, slowly, but accelerating a bit, and the improving job market is gradually chipping away at the unemployment rate.
Reflecting that good news, trucking executives are buying more new equipment — truck sales are on track for the strongest year since 2007 — which keeps tractor and trailer manufacturers working at — or close to — capacity. In fact, there have been occasional shortages of various key components.
Trucking managers are seeing more driver turnover, which certainly is a problem for any individual carrier, but overall is a sure sign of industry prosperity.
Nonetheless, while many trucking executives are buying new vehicles to replace equipment that’s become expensive to maintain in order to keep on the road profitably, they’re wisely cautious about expanding their fleets too rapidly.
That caution makes sense, because the economy remains vulnerable on a number of fronts.
For one thing, growth is slow, which means there are still a lot of people out of work or underemployed, definitely limiting their ability to increase spending on goods. Factory orders have slipped in recent months, although some manufacturing sectors, such as automobiles, seem solid and the most recent report on durable goods orders showed some strength.
Housing remains a big question mark. Sales of new homes were up in November, but have been bumbling along for the past year, and several local markets remain weak. Nationally, housing starts were up 9.8% in November, the highest rate in more than a year and a half — definitely a good sign. As housing growth is a very big factor in trucking demand, that’s definitely a sector to follow closely.
The international situation also bears close scrutiny. Europe is still struggling with its debt situation, and some economists see it heading toward recession. If that occurs, it means Europeans would buy fewer products made here.
Add to that the smoldering Middle East, the world’s biggest source of petroleum. Crude oil prices jumped recently when Iran threatened to close the Strait of Hormuz, and the United States quickly responded that a stranglehold on crude won’t be tolerated. That’s fine, but as the recent oil-price spike showed, a shooting war in the Middle East would probably push the price of fuel through the roof, with bad effects on the world economy, not to mention trucking prosperity.
So, we wish everyone a happy New Year but strongly advise all of you to keep your fingers crossed.
