Bob Costello
Chief Economist & Vice President
American Trucking Associations
Economic & Motor Carrier Industry Trends
November 7, 2013
The Freight Economy
•Washington continues to be a headwind on
economic growth – 2013 tax increases, sequester,
shutdown and debt ceiling, and healthcare (2014).
• The housing recovery and auto production are
helping freight volumes.
• The U.S. energy production boom is boosting
truck tonnage.
• Slower manufacturing is a negative, along with a
constrained consumer (x autos).
Various Housing Industry Measures
(YTD Year-Over-Year Percent Change)
30%
25%
23.9%
21.2%
20.7%
20%
18.9%
15%
11.7%
10%
5%
0%
New Housing
Starts
New Home Sales
Sources: Census Bureau, NAR, and ATA
New Permits
Residential
Construction
Spending
Existing Home
Sales
Housing Summary
• Rising prices and rising mortgage rates will slow the
housing recovery, but not detail it.
• 4.9-months supply of existing homes in September,
down from 5.4-months in September 2012, which is
helping home building.
• Distressed homes – foreclosures and short sales – were
14% of sales in September, down from 24% a year earlier.
•Home prices increased 12.0% from September 2013, the
19th straight gain, although prices are still 17.4% below
April 2006 peak.
Drivers of Household Spending
9.5%
10%
2012
2013
2014
5.2%
5%
4.8%
3.7%
1.7% 1.6% 1.6%
2.0%
0.3%
0%
Total Payrolls
Sources: BEA, BLS, and ATA
Real Disposable Income Existing Home Values
Thousands
Average Payroll Changes by Quarter
300
275
250
225
200
175
150
125
100
75
50
25
0
-25
-50
-75
Jobs
(Avg/mo)
Unemployment
Rate
2012
2013
2014
186k
182k
210k
8.1%
7.4%
7.2%
Oct only:
204k
Avg
158k
2010 – Q3 2013
2010
Sources: DOL and ATA
2011
2012
2013
Retail Sales
$450
Total
Sales
$425
2013
2014
5.3%
4.4%
5.4%
Year-over-Year
Percent Change
(Speed)
$400
Billions
2012
15%
Level (Direction)
10%
5%
$375
0%
$350
-5%
$325
-10%
$300
-15%
2005 2006 2007 2008 2009 2010 2011 2012 2013
Sources: Census Bureau & ATA
World’s Top Manufacturing Economies
Fact: U.S. is largest or second largest manufacturing country depending on how it
is measured.
China 15.2%
China 17.9%
U.S. 19.3%
U.S. 14.9%
ROW 56.7%
ROW 59.6%
Japan 7.6%
Japan 8.8%
Current $
Source: United Nations
Real $ with Exchange
Rate Adjustments
Factory Output
100
10%
Year-over-Year
Percent Change
Level of Production
5%
2007 = 100
95
0%
90
-5%
85
Factory
Output
80
2012
2013
2014
4.2%
2.3%
2.9%
-10%
-15%
75
-20%
2009
2010
Sources: Federal Reserve & ATA
2011
2012
2013
Crude and Natural Gas Production
(Annual Increases)
20%
15%
13.8%
15.1%
2012
2013
10%
5.4%
5%
1.0%
0%
Crude
Source: Energy Information Administration
Natural Gas
Real Gross Domestic Product
(quarterly, annualized rate percent change, 2005 dollars)
2010 – Q4 2014
6%
5%
Real GDP
2012
2013
2014
2.8%
1.5%
2.6%
4%
3%
2%
1%
0%
2010
Sources: BEA and ATA
2011
2012
2013
2014
Trucking Trends:
Demand
Changes in Freight Volumes
(Seasonally Adjusted)
8%
7.4%
7%
6%
2012
Jan-Sep YOY
5.2%
5.6%
5%
4%
3%
2.4%
2.3%
2%
2.0%
0.8% 0.6%
1%
0%
-1%
Tonnage
TL Loads
LTL
Shipments
Sources: ATA’s Monthly Truck Tonnage Report, Trucking Activity Report, & DAT.com
DAT Spot
Loads
Changes in TL Loads by Sector
(Seasonally Adjusted)
7%
Jan-Sep YOY
Q3 YOY
6%
5%
4%
4.6%
3.5%
3%
1.6% 1.8%
2%
1%
5.6%
2.3%
1.9%
0.4%
0%
Dry Van
Source: ATA’s Trucking Activity Report
Flatbed
Temp
Tank
Trucking Trends:
Capacity
TL Capacity Changes
(Percent Change in the Number of Company & IC Tractors)
2%
0.2%
0%
-0.7%
-2%
-4%
-6%
Jan-Sep YOY
Q3 YOY
Sep '13 vs Dec '07
-8%
-10%
Source: ATA’s Trucking Activity Report
Includes all types of truckload carriers
-6.2%
Are All TL Fleets Adding Capacity?
No
Decreased
Tractors
37%
Unchanged
24%
Source: ATA
Added
Tractors
39%
Average Month in 2013
U.S. Used Class 8 Truck Exports
25,000
22,443
22,000
21,039
20,000
16,121
15,000
13,845
14,713
15,357
9,716
10,000
6,495
5,745
5,000
2,782
3,321
4,135
1,475
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Sources: U.S. Trade Data & ATA
TL Supply vs Demand
110
2005 = 100
105
TL Tractor
Count Index
100
TL Loads Index
95
Oversupply
90
85
Through September 2013
80
2005
Source: ATA
2006
2007
2008
2009
2010
2011
2012
2013
THE CUMULATIVE EFFECT
Adding It All Up
Reduction in Productivity
• ELDs
• HOS
Fewer “Qualified” Drivers
• Sleep Apnea
• ELDs
• CSA
Increased Demand & Less Supply
• Economic Growth
• Truck Count Down from Peak in 2007
Capacity Crunch
The Driver Situation
TL Truck Driver Turnover Rates
150%
Large
125%
Q2 2013
Large TL: 99%
Small TL: 82%
LTL:
6%
Small
100%
75%
50%
25%
0%
2005
Source: ATA
2006
2007
2008
2009
2010
2011
2012
H1 '13
Construction Industry
Snapshot
35%
30%
25%
28.0%
23.9%
20%
15%
Over the last year, construction
employment has increased by 185,000.
And, in February 2013 alone, construction
payrolls grew by 48,000, the largest single
month in 7 years.
10%
2012
5%
2.0%
2013 YTD
2.9%
0%
Housing Starts
Construction Employment
Sources: Census Bureau and Department of Labor
Industry Costs
Costs Continue to Rise
Regulatory Costs
• Equipment
• HOS
Drivers
• Pay
• Turnover
• Recruitment
Fuel
• Despite Record Production, Fuel Costs Remain Elevated
Average Weekly Earnings for TL
Drivers
+59% since 1990
$900
$800
$700
$600
$500
$400
$300
$200
$100
$0
1990
Source: Department of Labor
1995
2000
2005
2010
2013
YTD
Real Average Weekly Earnings
for2013TLDollars
Drivers
-10% since 1990
$900
$800
$700
$600
$500
$400
$300
$200
$100
$0
1990
Source: Department of Labor
1995
2000
2005
2010
2013
YTD
Miles Per Truck Per Month Are Down
15,000
Includes all types of TL carriers
10,946
10,000
8,926
7,604
8,250
8,080
7,752
8,085
2010
2011
2012
2013YTD
5,000
0
2007
Source: ATA
2008
2009
Thanks!
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