Trucking industry future appears sound
Nov 1, 2006 2:11 PM
"The long run looks good." That was the message about the US economy and the trucking industry from American Trucking Associations chief economist at the association's Management Conference and Exhibition October 28-31 in Grapevine (Dallas) TX.
Bob Costello noted that truck tonnage is expected to increase 31 percent in the next decade, but pointed out that current bumps in the economic road will continue, such as traffic congestion and hours-of-service regulations that limit drivers' time at the wheel. At the same time, trucking company managers continue to wrestle with rising driver wages, diesel prices, and insurance premiums. Added to that are regulatory compliance and accompanying costs.
Joining Costello in a panel were John Felmy of the American Petroleum Institute and Nariman Behravesh of Global Insight. David Faber, CNBC anchor, moderated the presentation.
All agreed that a slowing housing sector dominates the reasons for the slide that the economy appears to be feeling this year and will continue to impact into 2007. "It's the far weakest sector of the economy," Behravesh said.
However, the panel predicted that consumers are likely to keep spending because of low interest rates and low inflation, a factor that bodes well for the economy. "The fundamentals for consumer spending is very strong," Behravesh said.
Felmy pointed out that new regulations, including recent transition to ultra low sulfur diesel (ULSD), over the last 10 years have scored a blow to the petroleum industry, costing about $47 billion dollars in the decade. However, the industry has rolled with the ULSD punch and experienced no supply disruptions to date. Diesel prices are going down and gasoline imports and production are at record numbers, he said.
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