Top Economists Share Their Outlook for the Years Ahead

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The growing driver shortage, an increasing supply of oil and fluctuating manufacturing levels will continue to heavily influence motor carrier costs, two leading economists told attendees of The NATSO Show 2016 Feb. 23 in Lake Buena Vista, Fla. 

Bob Costello, chief economist at the American Trucking Associations, said the driver shortage remains a critical issue for the trucking industry. “Last fall we put out a report that at that point said there was a shortage of 48,000 drivers. At current trends, it would balloon to 175,000 in 2024,” he said, adding that the industry needs to add 900,000 new drivers over the next 10 years.

To attract drivers, carriers continue to increase pay, Costello said. “I have members this year that are giving double digit pay increases to drivers.”

Kyle Isakower, vice president for regulatory and economic policy at the American Petroleum Institute, said although carriers are putting more money into driver pay, they continue to experience lower fuel prices. Isakower said the price of crude, which dictates the price at the pump, has decreased amid increased supply in the Middle East, the lifting of Iranian sanctions and a Chinese economy that hasn’t grown as fast as anticipated.

Isakower said overall energy demand is anticipated to grow by 9 percent between now and 2040. ”Oil is not a limited market. It is a globally traded commodity and what really matters with the price of oil is the global market,” he said, adding that the world will need 53 percent more energy in 2040 than it does today. “You’re going from 94 million barrels of production currently to 177 million barrels a day in 2040. 

Costello said falling oil prices are not an indicator that the economy is going down. “This is a supply issue, not a demand issue,” he said.

Overall, Costello said personal spending within the United States, which is one of the primary factors driving trucking demand, is estimated to grow 3.2 percent in 2016.

However, manufacturing has slowed and the U.S. has the highest inventory levels it has seen in over a decade if you take out the recession. “This measure of inventory has to come down but it doesn’t need to get back to the bottom,” he said.

The trucking industry has experienced some growth, Costello said, with smaller fleets growing by 4 percent in 2015. Growth among large carriers remained flat.  Costello said all modes of transportation will grow going forward and there will be about 525,000 additional class 8 tractors on the road from 2016-2025.

Photo Credit: Chuck Fazio/NATSO

Mindy Long's photo

Mindy Long

Before launching a full-time freelance career, Long edited NATSO's Stop Watch magazine. Prior to that Long worked as a staff reporter for Transport Topics, a weekly trade newspaper, covering freight transportation, fuel and environmental issues. In addition to covering the transportation sector, Long has written, reported and edited for a variety of media outlets. She was the Washington correspondent for WCAX-TV (CBS) in Burlington, Vt., a criminal court reporter in Chicago and a freelance copy editor for Kiplinger’s Personal Finance magazine in Washington D.C. Long hold a master’s degree from Northwestern University’s Medill School of Journalism in Evanston, Ill., and a bachelor’s degree in Communications from Westminster College in Salt Lake City.More
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