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The Economic Haze Affecting the Trucking Industry

The Economic Haze Affecting the Trucking Industry

The U.S. economy is expanding at a rapid rate, and the trucking industry is trying to keep up at the same rate, in order to fulfill the high freight demand nationwide. The surprising thing is that even though the sector is facing significant driver shortages, they have still managed to maintain their operations. Instead of hiring more employees and buying more trucks, the fleet enterprises are trying to increase their maximum capacity by increasing the number of trailers instead. This is one of the major constituents of the propagating plan put forward by the trucking giants.

Adding trailers would affect the productivity directly, by increasing the load capacity of each truck, and thus intensively increasing the productivity and performance level of each driver. The year 2016 will also be an important year for the trucking segment but experts are unable to predict the economic trends which will have direct effect on the truck companies. Most economic analysts are still trying to determine how the economic ups and downs will affect the operations regarding the transportation sector.

However, at one of the press conferences, the Conference Board predicted that the U.S. economy will advance faster than last year, with an expansion rate of 2.5%, and this fast pace will continue on, to the first financial quarter next year. The experts are visualizing economy as an integral part of the development system, which is influenced by the global environment, but shapes up, with help of solid national economic momentum. On one hand, the economy is improving by a better employment rate as well as wage growth, better housing options and low fuel costs, which is also boosting customer optimism and an above average spending capability. However, on the other hand, investment and business industries are still observing conservative policies regarding new elective investment opportunities.

Moreover, the limited economic growth and the strong dollar are somewhat diminishing the export opportunities. According to financial and economic analysts, the economy in 2016, will face a steep rise in the first quarter, but will return to the existing level halfway through. In short, the U.S. economy will face the same problems as it is facing now; i.e. low investment opportunities and decreased productivity.

The Conference Board’s report stated, “Labor shortages might add to upward pressure on wages and start to pinch corporate profits…But if investment or trade turn out to be more positive than anticipated, above average growth may even extend longer.”

Macro economist Bill Witte, FTR senior consultant, projected that 2016 will experience an economic growth rate of 2-2.5% with a fact paced and continuous growth mechanism. Economist Noël Perry, FTR senior consultant, is however, concerned about the economy, because eight years after recovering, it faces the risk of slowing down. Moreover, China’s decreasing economic growth will affect the global manufacturing market directly including the U.S.

Regarding the trucking industry, Perry said, “Trucking has experienced more growth than has the GDP — this has been the best freight recovery since 1990. The exposure is, could this change? And if it does it would happen just as the economic recovery starts to show its age. History tells us freight slows before a recession occurs. So, we could have slow growth in freight in 2016 and a recessionary condition in 2017.”
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