Connect with us

The Nation

ATA’s Costello: The biggest problem with 2019 is it had to follow 2018

Published

on

Speaking at the annual Arkansas Trucking Association Business Conference, American Trucking Association Chief Economist and Senior Vice President Bob Costello says that fears of an impending recession are premature. The industry is still growing, just not at the breakneck pace of late 2017 and 2018. (The Trucker: KLINT LOWRY)

We’ve all experienced it. You’ve been driving 70 mph for a while. Suddenly, you’re forced to slow down to 45 mph. It feels like you are crawling, even though a part of you knows if you were going this fast on a residential street, you’d feel like you were blazing.

Bob Costello, chief economist and senior vice president of international trade policy and cross-border operations for the American Trucking Associations, has noticed that a lot of people in trucking are having a similar sensation when they look at the economic health of the industry.

Costello was in Little Rock, Arkansas, May 15 for the annual Arkansas Trucking Association Business Conference and Vendor Showcase to give his perspective on the current state of the economy and the industry.

Everywhere he goes these days, Costello told the crowd, everyone keeps asking, “Are we headed to a recession?” After all, things definitely slowing down.

“I don’t believe that, folks,” Costello said flatly. “However, we have to reset our expectations. What I say is, we’re slowing, but we’re still growing. We have some reduced momentum. We are headed back to trend.”

The biggest problem about 2019 is it came after 2018, and 2018 was a hard act to follow.

“The big mistake is to look at year-over-year comps,” Costello said. “Those are not going to be good because 2018 was so good.

“Instead, take a more long-term look at where we were compared to several years ago and what direction we are heading. We may not be skyrocketing like we did for about a year and a half, but we are still moving upward, albeit at a more normal pace.

“Really, we’re in a decent spot. It’s not going to be 2018. But it’s certainly not going to be terrible, either.”

Costello said he wouldn’t expect a recession until 2021, at the earliest. Part of that is because the Federal Reserve has said they were going to put interest rate hikes on pause.

“Economic expansions do not die of old age,” Costello said. “They’re usually murdered.” And the Fed is often the culprit, but this time their restraint has come in time to hold off a recession.

That’s not to say there’s nothing to worry about, he added.  Gross domestic product took an upswing in the first quarter of 2019, Costello said, up 3.2%. That sounds good, until you consider that it was inflated by retailers stockpiling inventories at the time because of the threat of tariffs against China.

“I talk to retailers all the time,” Costello said. “They were bringing in as much stuff as they could.”

The term gets thrown around a lot, but Costello fears the U.S. is getting dangerously close to a genuine trade war with China. With tariffs going up, everything is going to get more expensive, and you don’t have to be an economic whiz to know what that will do to consumer spending.

Costello expects we’ll see consistent growth in the 2% range for the foreseeable future. Not spectacular, “but it’s still growth.”

Consumer sales is one of the key factors to look at that affects trucking. And one of the key factors in assessing the health of the consumer is to look at the job market. Here, the numbers are so good as to be almost inexplicable, Costello said.

For the past year, the American Job market has added an average of 212,000 a month.

“I don’t know where these people are coming from,” Costello said. You can expect an increase of about 60,000 simply from population growth, he said, “anything above that and you’re finding folks from somewhere.”

Some say it’s people returning to the job market from the recession, Costello said, but that was 10 years ago. Could immigration account for some of it? Maybe a little. But wherever they’re coming from, he doesn’t expect it can continue at this pace. The thing to remember, once again, is once it does, it only means it’s getting closer to normal.

The same could be said for the unemployment rate. It’s now at the lowest it’s been since December 1969. “Do you know we now have more job openings than we have unemployed people?” he said. “It’s been that way for almost two years now.”

Of course, when the job market’s good, salaries go up. And when incomes go up, spending goes up.

Another key indicator for trucking is the housing market. With 1.23 million new homes expected to be built, this is one of the less spectacular aspects of the economic picture, Costello said, but sometimes you have to adjust how you look at the numbers. For starters, millennials are not as concerned about home ownership as previous generations. Also, in a lot of desirable areas, there just isn’t any space left to build.

Another area where the industry needs to look at the numbers differently is inventories. Costello said. With the rise in eCommerce and quicker delivery guarantees, more merchandise has to be out there in the supply chain for local delivery, no matter where “local” happens to be.

“This is the change in the supply chain right here, and it has all sorts of ramifications,” Costello said.

Average length of haul for truckload has gone from nearly 800 miles to 507 miles last year, he said. “And what does that mean for driver pay and how we pay them?” The raises companies have given aren’t making up for those lost miles. How will that affect driver retention and the driver shortage?

“Let’s be honest, the driver shortage is an over-the-road for-hire truckload problem, it’s not the entire industry,” Costello said.

So, there are challenges the industry needs to address, but the overall state of the industry and the economy are still strong.

“If I have to summarize, 2018 was the best year ever, post-deregulation,” Costello said.  “I think if you took out last year and historically compared it, we’d be in a lot better mood.”

Continue Reading
Advertisement
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

The Nation

Mack Trucks doubles down on debut of RoadLife 2.0

Published

on

Mack Trucks kicked off RoadLife 2.0 with the debut of two episodes on roadlife.tv. One features the grueling efforts of Alaska Department of Transportation snowplow drivers to clear one of the snowiest highways in the United States. (Courtesy: MACK TRUCKS)

GREENSBORO, N.C. — Mack Trucks is doubling down on the debut of RoadLife 2.0 with the launch of two episodes on roadlife.tv.

Featuring the grueling efforts of Alaska Department of Transportation snowplow drivers to clear one of the snowiest highways in the U.S., to the challenge of building a modern logistics business from the ground up, RoadLife 2.0 picks up from last season, sharing the stories of everyday people doing extraordinary things.

“Our first episodes feature Alaska DOT and Full Tilt Logistics, two organizations with very different missions,” said John Walsh, Mack Trucks vice president of marketing. “Yet in both of their stories, a number of commonalities emerge: hard work, dedication and the ability of Mack trucks to help them achieve success.”

The Richardson Highway is the only road in and out of Valdez, Alaska, the terminus for the Trans-Alaska oil pipeline, and Alaska DOT relies on two Mack Granite model snowplows to keep the road open.

Battling in the neighborhood of 400 inches of snow annually, Alaska DOT relies on the trucks’ brute strength to clear the road, as well as some high-tech tools to make sure they stay on the road, even in whiteout conditions. A sophisticated differential GPS system with an in-cab display shows drivers where the truck is located to within less than an inch.

“Now, it’s almost like a video game,” said Mark Hanson, Alaska DOT terminal manager in describing the differential GPS system. “If I start going over the centerline, the indicator on screen turns red to tell me I’m not where I need to be. If I’m in a white out, I still know where I’m at in the road.”

Reno, Nevada-based Full Tilt Logistics takes the meaning of a family business to the next level. Starting with just three trucks, five members of the Novich family quickly grew the business into a 16-truck fleet hauling high-value loads across the western United States.

Full Tilt operates with the Mack Anthem model.

“When we were first starting out, I was doing some research into the driver shortage, where it’s at now and where it’s going,” said Cris Novich, managing director, transportation for Full Tilt Logistics. “It became abundantly clear that our No. 1 customer is the driver. If we keep them happy, they will want to come work here.”

Additional RoadLife 2.0 episodes will premiere throughout the summer and into the fall. Viewers can watch RoadLife episodes on roadlife.tv and Amazon Prime Video, with additional content featured on Mack Trucks’ social channels: Facebook, Twitter, Instagram, LinkedIn and YouTube.

 

 

 

 

 

Continue Reading

The Nation

WIT, Freightliner seek nominee for Influential Woman in Trucking Award

Published

on

The winner of the 2019 Influential Woman in Trucking award will be announced at the WIT Accelerate! Conference & Expo held in Dallas September 30-October 2. (Courtesy: WOMEN IN TRUCKING)

PLOVER, Wis. — Women In Trucking Association and Freightliner Trucks are seeking candidates for the 2019 Influential Woman in Trucking award.

The award was created in 2010 and recognizes women who make or influence key decisions in a corporate, manufacturing, supplier, owner-operator, driver, sales or dealership setting.

The winner must have a proven record of responsibility and have mentored or served as a role model to other women in the industry.

“The Influential Woman in Trucking Award recognizes exceptional women leaders who have been advocates and role models to others,” said Ellen Voie, president and CEO, Women In Trucking. “Each year, I am thoroughly impressed by the caliber of women nominated.”

Now in its ninth year, the award honors female leaders in the trucking industry.

Past recipients include Marcia Taylor, CEO of Bennett International Group; Rebecca Brewster, president and COO, American Transportation Research Institute; Joyce Brenny, president, Brenny Transportation/Brenny Specialized; Rochelle Bartholomew, CEO, CalArk International; Kari Rihm, president, Rihm Kenworth; Ramona Hood, vice president of operations, planning and strategy, FedEx Custom Critical; Daphne Jefferson, former deputy administrator at the Federal Motor Carrier Safety Administration, and Angela Eliacostas, founder and CEO, AGT Global Logistics.

“When I first started my career, there were very few women in the trucking industry let alone in leadership positions,” said Kary Schaefer, general manager, marketing and strategy, Freightliner Trucks and Detroit Components. “It’s amazing to see how the industry has changed and women are now a driving force in all areas of trucking. Freightliner is proud to sponsor this award and recognize those women who are not only making a difference in their own roles but for all women in the trucking profession.”

Nominations will be accepted through August 1 at https://www.womenintrucking.org/influential-woman-in-trucking.

The winner will be announced at the WIT Accelerate! Conference & Expo held in Dallas September 30-October 2.

Each finalist will be asked to serve as a panelist for the “Influential Women in Trucking” panel discussion. Those who nominate a candidate need to ask the nominee to save the date for this event if she is named a finalist.

Women In Trucking Association, Inc. is a nonprofit association established to encourage the employment of women in the trucking industry, promote their accomplishments and minimize obstacles faced by women working in the trucking industry. Membership is not limited to women, as 17 percent of its members are men who support the mission.

 

 

 

 

Continue Reading

The Nation

Group pushes FMCSA for rulemaking before changing crash preventability program

Published

on

The FMCSA's Crash Preventability Demonstration Program came about after motor carriers complained that there was no method in place to determine who was at fault for accidents involving big rigs. (Associated Press)

WASHINGTON — A coalition of 10 trucking-related organizations has petitioned the Federal Motor Carrier Safety Administration for a rulemaking if the agency intends to change how it analyzes and publishes data on motor carrier crashes.

The petition was filed on June 14, 2019, by the Motor Carrier Regulatory Reform (MCRR) coalition, which includes organizations representing more than 10,000 carriers, shippers and brokers.

David Gee, chairman of Alliance for Safe, Efficient and Competitive Truck Transportation (ASECTT) said FMCSA officials have indicated that they plan to make permanent as a matter of enforcement policy its crash preventability pilot program, the Crash Preventability Demonstration Program, which has been in place for nearly two years.

As of the end of the first quarter this year, carriers had submitted nearly 11,000 requests for crash preventability determinations under FMCSA’s narrowly defined program since August 2017. However, Gee said the program has not been subject to a formal rulemaking process.

On its website, the FMCSA said the Crash Preventability Demonstration Program is expected to last a minimum of 24 months.

The agency plans to make the program permanent, Transportation Elaine Chao said during an appearance at the Mid-American Trucking Show in Louisville, Kentucky, in March.

“As you know, this program is a response to industry concerns that crashes caused by factors outside of a driver’s control are still shown on the driver’s record,” Chao said. “Based on positive feedback from industry stakeholders, the Department will propose to make this demonstration program permanent. And, the Department of Transportation will propose to add even more of these scenarios for prevention reviews.”

The demonstration program got its impetus after motor carriers complained that there was no method in place to determine who was at fault for accidents involving big rigs, and drivers were getting penalized on their CSA scores and motor vehicle records, and carriers were getting penalized on their CSA scores.

In its explanation of the program on its website, the FMCSA said studies show that crash involvement is a strong indicator of future crash risk.

“The Crash Preventability Demonstration Program allows FMCSA to gather data to examine the feasibility, costs, and benefits of making crash preventability determinations on certain crash types,” the website says. “FMCSA will use the information from the program to evaluate if these preventability determinations improve the Agency’s ability to identify the highest-risk motor carriers.”

Drivers and carriers alike believe that about 75 percent of the crashes involving tractor-trailers and passenger vehicles are the fault of the driver of the passenger vehicle.

In its petition, the MCRR coalition argued that FMCSA must conduct a rulemaking before adopting any permanent program to call balls and strikes on crashes.

Publication of preventability metrics would, among other things, constitute a violation of the Fixing America’s Surface Transportation (FAST) Act, the Administrative Procedure Act (APA), and federal executive orders intended to protect the industry against bureaucratic overreach in the name of guidance, the coalition told the agency.

The petition said a key problem with FMCSA’s approach is that the term “preventability” is an artificial construct that does not equate to carrier fault, much less to a systemic violation of safety regulations.

The MCRR coalition argues that the publication of preventability data and metrics would result in increased insurance rates and lost business by carriers that the FMCSA acknowledges are fit to operate and, therefore, fit for shippers and brokers to use.

The subjectivity of the preventability standard and its lack of due process suggest that adopting the trial program as policy guidance would hurt the industry, especially small carriers, the petition said.

The Motor Carrier Regulatory Reform coalition is an affiliation of organizations that frequently weigh in with FMCSA and Congress to promote reasonable regulation and enforcement affecting motor carriers and their business partners. The coalition membership varies slightly depending on the particular issue.

For purposes of the crash preventability rulemaking petition the coalition includes the Air and Expedited Motor Carriers Association, the Alliance for Safe, Efficient and Competitive Truck Transportation, the American Home Furnishings Alliance/Specialized Furniture Carriers,  Apex Capital Corp., the Auto Haulers Association of America, the National Association of Small Trucking Companies, the Tennessee Motor Coach Association, The Expedite Alliance of North America, the Transportation & Logistics Council, and the Transportation Loss Prevention & Security Association.

Continue Reading

Trending