ATA’s Costello: Outlook bright for trucking

But average length-of-haul continues to drop for motor carriers large and small.

Speaking here at NATSO Connect – the annual convention of the trade group formerly known as the National Association of Truck Stop Operators – Costello said TL freight volumes increased 2.8% in 2017 versus 2016, more than surpassing the weak 0.1% increase in TL volumes that occurred in 2016 versus 2015. On top of that, TL freight volumes surged 7% in the fourth quarter of last year and the pace hasn’t let up yet.

“I’ve been hearing consistently from motor carriers that this is the best January they’ve ever seen” in terms of freight demand,

Costello said. “This has already been the third longest economic expansion in U.S. history and by spring it will be the second longest. Usually by this point [in an economic expansion] we’re starting to slow down. Instead we have the opposite happening.”

Right now, based on the trends he’s seeing, Costello expects overall U.S. gross domestic product (GDP) growth to range between 2.7% and 2.8% this year and “there is no reason it can’t do that in 2019.”

Costello did offer a few downcast notes, one of which being that length-of-haul for trucking has declined 34% over the last 17 years, falling in the dry van segment from just under 800 miles in 2000 to 527 miles by 2017.

Even though TL volumes surged 7% in the fourth quarter last year, with overall 2017 TL volumes up 2.8% year-over-year, mileage stayed flat. But that was the best year since 2014 for mileage, as trucking mileage declined in 2015 and 2016, he said.

That decline in truck mileage is mainly due to supply chain changes being driven by the impact of e-commerce, he said.

“If you look at the retail supply chain, in 2000, you had big box retailers working out of a handful of distribution centers (DCs),” Costello noted. “But by 2017 each of them had dozens of DCs all over the country. Online shopping drove this and big box retailers followed; now that consumers order something online on the East Coast and want it in two days, do you think anyone is going to ship it from California? So we’re seeing a shift to more regional operations. But less miles means more trucks will be needed, so eventually, that will increase mileage. We’ll see it go back up as more trucks get on the road.”

This article was originally posted by American Trucker.