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residential construction finally started to show some life in 2012 with a 25 percent increase to 767,000 units and an expected 28 percent increase units this year. Aside from autos and housing, how-

ever, the economy is slowing. Consumer spending on goods increased by 4.4 percent in 2012 but is expected to increase only 2.6 percent in 2013. Factory orders are ex- pected to slow significantly in 2013. Related indicators such as manufacturing output also are showing slower growth. After increasing by 8.9 percent in 2012, busi- ness investment is expected to increase 5.1 percent in 2013. “Most economic indicators are deceler-

ating, not accelerating,” he said. “The only ones that are accelerating are housing and autos. Everything else is slowing down.” For the trucking industry, 2013 should

be a year of slower growth before things really improve in 2014 and 2015. Invento- ries related to sales are rising, which means fewer goods will need to be shipped this year. For-hire truck tonnage, after rising 2.7 percent in 2012, is expected to cool to 2 percent growth in 2013, with loads increasing by only .7 percent. LTL tonnage is expected to increase 2.3 percent after

increasing 5 percent in 2012. Freight volumes in 2013 should be low-

er than in 2012. But again, as long as there is no recession, Costello expects that to be temporary before things pick up in 2014. From fall 2011 to fall 2012, LTL volumes dropped .8 percent while large company truckload volumes fell 2.3 percent. Truck- load volumes for small companies, defined as those with less than $30 million in annual revenues, fell 13.4 percent. Flatbed, tank, temperature-controlled and dry van loads all have been on the decline. Long- haul drives of 1,000 miles or more were down 15.4 percent from one fall to another. Carriers are on the right side of the

supply and demand equation, however, which should help pricing. The nation’s fleet capacity is still below 2007 levels. While demand and truck supply have been roughly tracking each other since there was an oversupply in 2009, the nation’s fleet cannot handle two consecutive quarters of three percent gross domestic product growth at current levels. That’s partly because the fleet is ag-

ing – from an average age of 5.8 years in 2006 to 6.8 years in 2011 – and carriers are reluctant to buy new equipment because

of purchasing and maintenance costs. New tractors now cost $125,000 compared to $95,000 in 2006. Moreover, because their assets have aged, carriers have less trade- in value and must finance more of their purchases. For example, a seven-year-old tractor might trade for $20,000, meaning a company would have to finance $105,000 – more than the entire cost of a tractor in 2006. Indeed, according to Costello, equip-

ment has replaced diesel fuel as carriers’ most worrisome expense. After dropping to $2.99 a gallon in 2010, diesel fuel hit nearly $4 in 2012, but is expected to drop to $3.83 in 2013. Fortunately, rising fuel prices don’t result in nearly the number of trucking fail- ures as in the past because fuel surcharges have become accepted in the marketplace. In other economic news, unemploy-

ment is slowly dropping from 8.1 percent in 2012 to 7.7 percent in 2013. However, those numbers are deceiving because the unemployment rate only tracks people who are actually looking for a job. The impor- tant figure is job creation. That number has been stuck at 150,000 jobs per month and should remain at that pace the rest of this year. In a good economy, it reaches 350,000.



SPRING Q1 2013

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