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ATA economist says trucking capacity crunch coming

 American Trucking Associations Chief Economist Bob Costello said the trucking industry will eventually see a capacity crunch as demand for freight services will outstrip a slowly growing supply of trucks and drivers. He spoke during the American Trucking Associations Management Conference & Exhibition in Orlando FL

“At the moment, fleets are expanding slowly,” Costello said, “which means that once we see more consistent, accelerated economic growth--think 2.75% or 3% increases in GDP (gross domestic product) on a regular basis--it will eventually cause very tight capacity.”

Costello was joined by Kenneth Vieth, III, president and senior analyst at ACT Research Co and Mark Vitner, managing director and senior economist at Wells Fargo for the “All Eyes on the Economy” panel discussion sponsored by Bendix Commercial Vehicle Systems LLC and moderated by Fox News Channel’s Stuart Varney.

Costello said at the moment, ATA’s seasonally adjusted truck tonnage index was increasing faster than overall loads, which is a sign of a limited recovery.

“Our tonnage index continues to rise, mostly because recovery in sectors like energy and construction are outpacing the recovery in the general economy,” he said. “So that heavy freight is really driving tonnage even if the number of loads is growing slower.”

With slow growth in loads and rising costs, Costello said fleets could see weakened margins in the near term.

“While we do see tightening capacity going forward, until we get to those consistent levels of growth, margins will be under pressure because the costs of fuel, driver recruitment and retention and equipment will rise faster than freight rates,” he said. “However, once capacity does tighten, carriers will see improvement on the bottom line.”

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