Presentation Transcript

1. Economics & Industry UpdateJuly 29, 2011Bob CostelloChief Economist & Vice PresidentAmerican Trucking Associations

2. Economic Summary Outlook is still for a slightly better second half than first half of 2011, but that is not a given. It will depend on several factors, including: Hiring improves Increased manufacturing The end of supply chain disruptions from Japan Bottoming of non residential construction Oil/gasoline prices stay lower for now (WTI averaging at or below $100/barrel for rest of the year) Congress extends the debt ceiling! Businesses take accelerate business equipment spending
3. Economic Headwinds Remain
4. Housing Starts & Permits Millions; Seasonally Adjusted Annualized Rate Housing remains flat despite cheap money: why? Housing prices are still falling Low family formation Tight credit conditions Sources: U.S. Department of Commerce and ATA
5. Job Creation is Lacking (Net Job Changes; Thousands) 2005 – 2011 Need total payrolls to increase an average of 175,000/month – much higher than June’s 18,000. Sources: Department of Labor and ATA
6. Unemployment Rate Will Increase Before Falling 2005 – 2011 9.2% Sources: Department of Labor and ATA
7. Inflation Measures Have Risen Seasonally Adjusted; Year-over-Year Percent Change 1980 – June 2011 Most of the inflation problems are commodity driven – we should see some leveling off soon For now, inflationary pressures are more outside the U.S. Sources: Department of Labor and ATA
8. Government Must Shrink…But It’s Going to Hurt 2010; Percentage of GDP Government includes Federal, State, and Local consumption expenditures and gross investment State and Local is about 55% of the Gov’t total Sources: Bureau of Economic Analysis and ATA
9. Consumers are Suffering from a Lack of Confidence 2005 – June 2011 Sources: The Conference Board and ATA
10. There Are Economic Bright Spots
11. Manufacturing Activity Is Robust… 2005 – June 2011; 2007=100 YTD – Production is up 5.3% from same period last year. Sources: Federal Reserve and ATA
12. …Helped by U.S. Goods Exports Millions of Dollars; Seasonally Adjusted 2005 – April 2011 Sources: Census Bureau & ATA
13. Wages Fell, but are Rising Again Private wages & salary disbursements; billions US$, annual rate Through May 2011 Sources: Bureau of Economic Analysis and ATA
14. Household Debt Service Ratio Percentage of Disposable Personal Income 1980 – Q1 2011 Sources: Federal Reserve and ATA
15. Oil Prices (WTI) Price Per Barrel Oil prices have come down, which has helped consumers. Nevertheless, they remain high historically. Source: Wall Street Journal
16. Inventories Are Lean (Includes retail, wholesale, and manufacturing; Through May 2011) Sources: Census Bureau and ATA
17. GDP Forecast
18. Real Gross Domestic Product – Subpar Growth Ahead (quarterly, annualized rate percent change, 2005 dollars) 2008 – 2011 Annual GDP Numbers 2009: -2.6% 2010: +2.9% 2011: +2.3% 2012: +2.6% Long-run Average (3%) 1.6% 2.5% 2.5% Forecasts Our Forecast Assumes: Oil prices average no more than $100 for the rest of the year Fed doesn’t increase interest rates until later next year Debt ceiling is raised before Aug. 2 Light-duty vehicle production improves/supply disruptions from Japan end Sources: IHS Global Insight and ATA
19. Motor Carrier Trends Demand
20. ATA’s For-Hire Volumes Index Seasonally Adjusted; 2000 = 100 TL Through May2011 LTL Source: ATA’sTrucking Activity Report
21. ATA’s For-Hire TL Loads Index Seasonally Adjusted; January 2009 = 100 +10.2% Since Jan ‘09 Large TLs -3.8% Since Jan ‘09 Small TLs Through May 2011 Source: ATA’sTrucking Activity Report
22. Industry Volumes Are Very Inconsistent YTD 2011 vs Same Period in 2010 Sources: ATA’s Trucking Activity Report
23. ATA’s For-Hire Revenue/Mile Index Seasonally Adjusted; January 2009 = 100 +9.3% Since Jan ‘09 Large TLs Small TLs +2.7% Since Jan ‘09 Through May 2011 Source: ATA’sTrucking Activity Report
24. Real For-Hire Revenue/Mile Index Includes TL & LTL; 1980 = 100 In 2010, real (inflation adjusted) average revenue per mile was 34% below 1980. Source: American Trucking Associations
25. Motor Carrier Trends Supply
26. For-Hire TL Supply vs Demand 2005 = 100 TL Loads Index TL Tractor Count Index Oversupply Through May 2011 Source: ATA

27. Bottom Line on Capacity

    Little, if any, capacity additions are coming on-line Government regulations have or will limit capacity Driver shortage will return worse than before, limiting capacity further Barriers to entry into the trucking industry are rising and will continue to rise There is nothing that suggests a significant amount of supply will enter the industry anytime soon
28. Motor Carrier Trends Costs
29. Cost Pressures from All Directions
30. On-Highway Diesel Prices Price Per Gallon Source: Energy Information Administration
31. U.S. Class 8 TrucksAverage Age 1980-2010 Sources: ACT Research & ATA
32. Maintenance Costs per Mile Sources: TMC, Motor Carrier Annual Reports, and ATA
33. Class 8 Tractor Prices Have Increased Significantly This example is for illustration purposes only. Actual numbers may vary. Source: ATA
34. Weekly EarningsAverage Weekly Earnings of “Production” Workers Weekly Earnings = Pay Rate * Amount Worked (mileage or hours) Trucking Construction 1990 – Q1: 2011 Manufacturing Trucking = Long-Haul TL Drivers Source: U.S. Department of Labor
35. Real Weekly Earnings of TL Drivers Average Weekly Earnings of “Production” Workers Adjusted for Inflation; 1982-1984 Dollars Weekly Earnings = Pay Rate * Amount Worked (mileage or hours) 1990 – Q1: 2011 Trucking = Long-Haul TL Drivers Source: Department of Labor and ATA
36. Quarterly TL Line-Haul Driver Turnover Annualized Rates 2005-Q1 2011 Source: ATA
37. QUESTIONS?