Spot Market Climb The rise and eventual dip in the 2015 spot market
By Steve Brawner Contributing Writer
The improving consumer economy
should continue to be good news for motor carriers—especially for the grow- ing contract carrier sector after many shippers were forced to rely on the spot market last year. Economist Donald Broughton,
managing director of Avondale Partners, told the Arkansas Trucking Association this spring that the manu- facturing economy is slowing but that the much bigger consumer economy is starting to accelerate. In a September interview, he said he expects a contin- ued malaise in the manufacturing econ- omy while the consumer economy picks up steam. By November or December, he expects consumers to spend more of the money they are saving thanks to low fuel costs. “It costs less to commute. It costs
less to heat and cool your house, and we expect the consumer to spend that sav- ings on consumer goods,” he said. Bob Costello, American Trucking
Associations’ chief economist, agreed that American consumers are experiencing better times than they have in the recent past. There were more job openings in July than at any time since 2000. Fuel prices are down, the housing sector is improving, and imports are cheaper. Total truckloads increased 2.2 percent last year and, this year, 2 percent, a number which he described as “not great, but they’re
ARKANSAS TRUCKING REPORT | Issue 5 2015
certainly not terrible.” “Looking ahead, I think you have
an economy that’s going to grow closer to 3 percent in ’16 and ’17 as long as nothing internationally throws us off, and I think trucking’s going to benefit a lot from that,” he said. Costello said that many shippers
believed the economy would expand this year, especially during the first quarter, so the ratio of inventory to sales increased to the point that inven- tories reached their highest level since the recession ended. He expects that to correct during the third and fourth quarters of this year, but it will not return to recent lows because cautious retailers, wholesalers and manufactur- ers are holding more inventory.
“I’m very surprised at the number
of shippers I’ve spoken with that told me they are concerned about the driver shortage. They are concerned that it’s getting worse, and they are adding some cushion to their supply chain,” he said. Broughton correctly predicted in
an interview shortly before the Federal Reserve Board met in September that it would not raise interest rates, as many expected it to do. In fact, he doesn’t expect rates to rise by the end of the year. The dollar is too strong compared to the other major currencies, and rais- ing rates would only strengthen it, mak- ing it harder for American exporters to compete in the global economy, he said.
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