Signs are increasing that the nation’s economic health is steadily improving. It’s not a barnburner, and there is still some uncertainty, as the Commerce Department trimmed its estimate of fourth-quarter 2013 growth to an annual rate of 2.4% from 3.2% in an earlier estimate.
The recovering economy is good news for the trucking business, which is often seen as a bellwether for the economy. If freight carried by the nation’s motor carriers is a reliable sign, the overall economy is indeed headed for better times.
Truck tonnage, measured by American Trucking Associations, jumped 8.2% in December, capping its strongest year since 1998, with tonnage up 6.2% in 2013 from the year before. January saw a bit of a setback, but that was due to severe weather across most of the nation, and the trend remained solid.
In addition to GDP, other economic indicators are showing strength, with growth in industrial production and manufacturing.
“I’ve heard from many fleets that freight was good, in between storms,” said Bob Costello, ATA’s chief economist. “The fundamentals for truck freight still look good.”
With tonnage growing, truckers are investing. Orders for new Class 8 tractors surged 30.2% in February, and the prices for used trucks are at record highs, showing that buyers in that market have both freight to haul and money to invest.
Some problems remain — many carriers have to leave freight on the loading dock because they can’t find the drivers they need. As Transport Topics reported from the Stifel Nicolaus investor conference last month, many carriers are preparing to raise rates and driver pay.
In fact, two major less-than-truckload fleets announced last week that they will raise rates — well ahead of announcements in prior years.
FedEx Freight said it plans a 3.9% increase, and ABF Freight System announced a 5.4% hike.
Against that backdrop of growing economic strength and confidence, President Obama introduced a budget calling for a slight increase in the federal government’s spending for highways — a 1.8% increase to $73.61 billion for surface transportation in 2015, part of a requested $302.3 billion four-year plan.
That’s good as far as it goes, but it doesn’t go far enough. The nation’s highways have been starved of adequate investment for years, partly because legislators and presidents have lacked the political will to raise fuel taxes to give the Highway Trust Fund a strong, steady base for growth.