ATA: Trucking will continue to dominate freight movement

Look for trucking to continue to dominate freight movement well into the year 2026, says the American Trucking Associations’ “Freight Forecast” released earlier this fall.

Trucks carried 68.8 percent of tonnage and generated more than 80 percent of revenue last year, with total truck tonnage (including for-hire and private carriers) racking up 9.96 billion tons in 2014, the highest level since 2008, ATA said in its Forecast foreword.

And it went on to predict that according to its calculations, trucks will be responsible for more than 69 percent of the total freight tonnage through 2016 as housing construction continues to grow, spurring increases in the transport of appliances, furniture and home goods. And although some of trucking’s freight may be lost to pipelines in the future, truck transport will not lose much, with expectations for trucking’s market share to consist of 65 percent of total freight between 2021 and 2026.

Pipelines are expected to undergo what the Forecast called a “tremendous capital expansion” during that time and to be the “fastest-growing mode through 2026.” It’s predicted that trucking will begin to lose its share of the freight pool as pipeline tonnage grows but that trucks will dominate the movement of general commodities, which will continue to grow at a faster pace than bulk commodities and will also benefit from U.S. crude and natural gas production.

The Forecast predicted that trucks’ share of the total tonnage will drop from 68.8 percent last year to 65.4 percent in 2021 and 64.6 percent by 2026 and that trucking’s share of total revenue by 2026 will be 77.1 percent compared with 80.3 percent in 2014.

The report said that the truckload segment of for-hire trucking continues to be dominated by the mega-carriers such as Werner Enterprises, Schneider, Swift Transportation, U.S. Xpress, Heartland Express and Knight, among others.

And although the main business model of large truckload carriers has been full truck movements from origin to destination, most of the major TL carriers also operate in the less-than truckload arena, it pointed out.

It was noted that truckload tonnage had risen by more than 15 percent by 2014 and is expected to expand 2.9 percent this year and 2.1 percent afterwards, reaching 5,554 million tons by 2021, accounting for 47 percent of total truck freight tonnage and 31 percent of all freight movement.

Revenue associated with truck transportation was calculated at $700.4 billion in 2014 and is expected to reach 986.4 billion by 2021, or an increase of 5.8 percent per year on average, then slowing to a growth of 3.8 percent per year after that, the report predicted.

For-hire carriers should play a bigger role in the future: Since emerging from the recession, for-hire tonnage has risen 15 percent, according to the Forecast, which pointed out for-hire trucking’s “flexibility, timely delivery and steady service improvements.”

Of course the overall economy will have a big part to play, as will the price of diesel, which will go up or down depending on what oil does.

Energy analysts say that as U.S. domestic oil production slows, America will increasingly import oil from other countries, which will likely drive up oil and diesel prices.

The report expects oil prices to start to rise from 2017 to 2021, although it didn’t list greater oil imports as the reason but said U.S. extraction of oil and natural gas will expand 3 percent this year and approximately 4.5 percent during the 2017-2021 period. Forecasters also look for unconventional oil and NG production methods to expand more in the future, benefitting the truckload segment of the industry.

“We remain cautiously optimistic about the long-term prospects for the U.S. economy as 2015 sets the pace for even stronger growth in the broader economy and the nation’s freight pool,” ATA said in the report’s introduction, adding that there is still a lot up in the air regarding governmental regulations and policies which directly impact trucking.

“Clarification on the regulatory climate, tax and spending policies, and healthcare could go a long way to helping the economy develop an even more favorable tilt,” it stated.

Truckload tonnage is expected to expand 1.2 percent from 2022 to 2026, accounting for just under 31 percent of total domestic freight by 2026 and garnering 47 percent of all truck freight movement. Also by 2026 truckload revenue is expected to increase to $557 billion, up from $460 billion in 2021.

Capacity will play a strong role, too, with the report noting that there is some tightness, now, in freight-handling capacity, “not enough to cause near-term problems but enough to suggest that capacity expansion will be required if the modes are going to be able to handle anticipated growth in selected near-term, commodity-specific freight flows.”