Economic & Industry UpdateMarch 8, 2011
Bob Costello
Chief Economist & Vice PresidentAmerican Trucking Associations
Sources: Federal Reserve & ATA
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 201370
80
90
100
110
70
80
90
100
110Manufacturing Output
Seasonally Adjusted Level of Output; Index (2007=100)
2000-2013Forecast(annual average)
4.7%
3.2%
3.8%
Sources: Census Bureau & ATA
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013$250
$300
$350
$400
$450
$250
$300
$350
$400
$450 Retail Sales
Seasonally Adjusted Annual Rates; Billions of Dollars
2000-2013Forecast(annual average)
Billions Billions
3.5%3.0%
2.6%
Sources: Bureau of Economic Analysis and ATA
2008
2009
2010
2011
$5,000
$5,100
$5,200
$5,300
$5,400
$5,500Wages Fell, but are Rising Again
Private wages & salary disbursements; billions US$, annual rate
Sources: Federal Reserve and ATA
1980198119821983198419851986198719881989199019911992199319941995199619971998199920002001200220032004200520062007200820092010$0
$10,000,000
$20,000,000
$30,000,000
$40,000,000
$50,000,000
$60,000,000
$70,000,000 Household Net Worth Millions
1980 – Q3: 2010
Sources: Federal Reserve and ATA
198019811982198319841985198619871988198919901991199219931994199519961997199819992000200120022003200420052006200720082009201010%
11%
12%
13%
14%Household Debt Service Ratio
Percentage of Disposable Personal Income
1980 – Q3 2010
Sources: Census Bureau & ATA
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 20130.0
0.5
1.0
1.5
2.0
2.5
0.0
0.5
1.0
1.5
2.0
2.5 Housing Starts
Seasonally Adjusted Annual Rates
2000-2013 Forecast(annual average)
Millions Millions
16%
61%
31%
Sources: Census Bureau and ATA1992FebMarAprilMayJuneJulyAugSepOctNovDec1993FebMarAprilMayJuneJulyAugSepOctNovDec1994FebMarAprMayJuneJulyAugSepOctNovDec1995FebMarAprMayJuneJulyAugSepOctNovDec1996FebMarAprilMayJuneJulyAugSepOctNovDec1997FebMarAprilMayJuneJulyAugSepOctNovDec1998FebMarAprMayJuneJulyAugSepOctNovDec1999FebMarAprMayJuneJulyAugSepOctNovDec2000FebMarAprMayJunJulAugSepOctNovDec2001FebMarAprMayJunJulAugSepOctNovDec2002FebMarAprMayJunJulAugSepOctNovDec2003FebMarAprMayJunJulAugSepOctNovDec2004FebMarAprMayJunJulAugSepOctNovDec2005FebMarAprMayJunJulAugSepOctNovDec2006FebMarAprMayJunJulAugSepOctNovDec2007FebMarAprMayJunJulAugSepOctNovDec2008FebMarAprMayJunJulAugSepOctNovDec2009FebMarAprMayJuneJulyAugSepOctNovDec2010
1.2
1.3
1.4
1.5
1.6
Total Business Inventories-to-Sales Ratio
(Includes retail, wholesale, and manufacturing; Through December 2010)
Sources: Department of Labor and ATA
1980198019801980198019801980198019801980198019801981198119811981198119811981198119811981198119811982198219821982198219821982198219821982198219821983198319831983198319831983198319831983198319831984198419841984198419841984198419841984198419841985198519851985198519851985198519851985198519851986198619861986198619861986198619861986198619861987198719871987198719871987198719871987198719871988198819881988198819881988198819881988198819881989198919891989198919891989198919891989198919891990199019901990199019901990199019901990199019901991199119911991199119911991199119911991199119911992199219921992199219921992199219921992199219921993199319931993199319931993199319931993199319931994199419941994199419941994199419941994199419941995199519951995199519951995199519951995199519951996199619961996199619961996199619961996199619961997199719971997199719971997199719971997199719971998199819981998199819981998199819981998199819981999199919991999199919991999199919991999199919992000200020002000200020002000200020002000200020002001200120012001200120012001200120012001200120012002200220022002200220022002200220022002200220022003200320032003200320032003200320032003200320032004200420042004200420042004200420042004200420042005200520052005200520052005200520052005200520052006200620062006200620062006200620062006200620062007200720072007200720072007200720072007200720072008200820082008200820082008200820082008200820082009FebMarAprMayJuneJulyAugSepOctNovDec20102011-5%
0%
5%
10%
15%
CPI Core CPI
Retail Inflation Measures Seasonally Adjusted; Year-over-Year Percent Change
Through January 2011
Inflation is not a near-term threat, but something to watch in the longer-run.
Sources: Federal Reserve and ATA
1952Q11952Q21952Q31952Q41953Q11953Q21953Q31953Q41954Q11954Q21954Q31954Q41955Q11955Q21955Q31955Q41956Q11956Q21956Q31956Q41957Q11957Q21957Q31957Q41958Q11958Q21958Q31958Q41959Q11959Q21959Q31959Q41960Q11960Q21960Q31960Q41961Q11961Q21961Q31961Q41962Q11962Q21962Q31962Q41963Q11963Q21963Q31963Q41964Q11964Q21964Q31964Q41965Q11965Q21965Q31965Q41966Q11966Q21966Q31966Q41967Q11967Q21967Q31967Q41968Q11968Q21968Q31968Q41969Q11969Q21969Q31969Q41970Q11970Q21970Q31970Q41971Q11971Q21971Q31971Q41972Q11972Q21972Q31972Q41973Q11973Q21973Q31973Q41974Q11974Q21974Q31974Q41975Q11975Q21975Q31975Q41976Q11976Q21976Q31976Q41977Q11977Q21977Q31977Q41978Q11978Q21978Q31978Q41979Q11979Q21979Q31979Q41980Q11980Q21980Q31980Q41981Q11981Q21981Q31981Q41982Q11982Q21982Q31982Q41983Q11983Q21983Q31983Q41984Q11984Q21984Q31984Q41985Q11985Q21985Q31985Q41986Q11986Q21986Q31986Q41987Q11987Q21987Q31987Q41988Q11988Q21988Q31988Q41989Q11989Q21989Q31989Q41990Q11990Q21990Q31990Q41991Q11991Q21991Q31991Q41992Q11992Q21992Q31992Q41993Q11993Q21993Q31993Q41994Q11994Q21994Q31994Q41995Q11995Q21995Q31995Q41996Q11996Q21996Q31996Q41997Q11997Q21997Q31997Q41998Q11998Q21998Q31998Q41999Q11999Q21999Q31999Q42000Q12000Q22000Q32000Q42001Q12001Q22001Q32001Q42002Q12002Q22002Q32002Q42003Q12003Q22003Q32003Q42004Q12004Q22004Q32004Q42005Q12005Q22005Q32005Q42006Q12006Q22006Q32006Q42007Q12007Q22007Q32007Q42008Q12008Q22008Q32008Q42009Q12009Q22009Q32009Q42010Q12010Q22010Q3$0
$500,000
$1,000,000
$1,500,000
$2,000,000
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%Businesses are Cash Rich
Percentage of Liquid Assets to Total Assets
Liquid Assets
Millions
1952 – Q3 2010
2008
2008
2008
2008
2009
2009
2009
2009
2010
2010
2010
2010
2011
-8%-6%-4%-2%0%2%4%6%8% (Real GDP, Annual percent change, 2005 dollars)
Real Gross Domestic Product
Sources: IHS Global Insight and ATA
2008 – 2011Long-run Average (3%)
Annual GDP Numbers2009: -2.6%2010: +2.9%2011: +3.2%2012: +2.9%
The Biggest Concern:
Oil Prices
Source: Wall Street JournalJan-95 Jan-97 Jan-99 Jan-01 Jan-03 Jan-05 Jan-07 Jan-09 Jan-11
$0
$25
$50
$75
$100
$125
$150 Oil Prices (WTI)Price Per Barrel
Source: Energy Information AdministrationJan-94 Jan-96 Jan-98 Jan-00 Jan-02 Jan-04 Jan-06 Jan-08 Jan-10
$0.90
$1.40
$1.90
$2.40
$2.90
$3.40
$3.90
$4.40
On-Highway Diesel PricesPrice Per Gallon
Sources: ATA, EIA, and Highway Statistics2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
$0 $20 $40 $60 $80
$100 $120 $140 $160
$46 $46 $45 $52
$66
$92
$106 $114
$143
$80
$102
$122 $130
Industry Diesel Expense
Forecasts are derived from EIA diesel price forecasts and ATA truck freight volume forecasts.
Forecast
Billions
Motor Carrier Trends
Demand
Source: ATA’s Monthly Truck Tonnage Report
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010-10%
-8%-6%-4%-2%0%2%4%6%8%
-5.2%
-0.5%
4.1%3.0%
5.8%
2.4%
-1.8% -1.4%
1.1%
-8.6%
5.7%
For-Hire Truck TonnageAnnual Percent Change
Includes TL & LTL
Source: ATA’s Monthly Truck Tonnage Report
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 201090
95
100
105
110
115
120
125 ATA’s For-Hire Truck Tonnage Index Seasonally Adjusted; 2000 = 100
Through January2011
Source: ATA’s Trucking Activity Report
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010-16%-14%-12%-10%
-8%-6%-4%-2%0%2%4%6%8%
-2.4%
5.7%5.0%
0.3%
-1.9%
0.1% 0.2% 0.2% 0.6%
-14.7%
4.8%
For-Hire TL LoadsAnnual Percent Change
Source: ATA’s Trucking Activity Report
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 201085
90
95
100
105
110
115
120
125 ATA’s For-Hire TL Loads Index
Seasonally Adjusted; 2000 = 100
Through December 2010
Source: ATA’s Trucking Activity Report
Series10%
2%
4%
6%
8%
10%
12%
Tank; 9.9%
Dry Van; 1.4%
Flatbed; 3.8% Temp
Control; 2.4%
Loads by TL Sector2010 Compared with 2009
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 201080
90
100
110
120
130
140
150
ATA’s For-Hire TL & LTL Revenue Indexes
Seasonally Adjusted; 2000 = 100
Through December 2010
TL average Revenue/Mile
Source: ATA’s Trucking Activity Report
LTL average Revenue/Ton
Motor Carrier Trends
SupplyCapacity Additions or Replacements?
Sources: ACT Research & ATA
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
5.05.25.45.65.86.06.26.46.66.87.0Years
U.S. Class 8 TrucksAverage Age
1995-2010
Source: Wards
2005
2006
2007
2008
2009
2010
0
5,000
10,000
15,000
20,000
25,000
30,000 U.S. Class 8 Truck SalesMonthly Retail Sales; Through January 2011
Annual Figures2005: 253k2006: 284k2007: 151k2008: 133k2009: 95k2010: 106k2011: 111k(rate from Jan only)
Source: ATA2005 2006 2007 2008 2009 2010 2011
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000Illustration: Trade Cycle of a
2005 OTR Tractor Normal Mileage vs Actual and Projected Mileage Trade Point: 550,000 Miles
Normal Mileage: 115,000/Year
Actual Mileage based on average miles per truck per year from fleet surveys. Projected Mileage: 100,000 in 2010 and 115,000 in 2011.
Sources: TMC, Motor Carrier Annual Reports, and ATA
200k 300k 400k 500k >550k$0.00
$0.05
$0.10
$0.15
$0.20 Maintenance Costs per Mile
Truck Purchase DecisionThis example is for illustration purposes only. Actual numbers may vary.
2006 2010
Source: Avondale Partners, LLC
Q1
00Q
3 00
Q
1 01
Q3
01Q
1 02
Q3
02Q
1 03
Q3
03Q
1 04
Q3
04Q
1 05
Q3
05Q
1 06
Q3
06Q
1 07
Q3
07Q
1 08
Q3
08Q
1 09
Q3
09Q
1 10
Q3
10
200
400
600
800
1,000
1,200
1,400 Trucking FailuresFailures only includes fleets with at least five trucks
Source: ATA
2005
2006
2007
2008
2009
2010
80
85
90
95
100
105
110 For-Hire TL Supply vs Demand2005 = 100
Through December 2010
TL Loads Index
TL Tractor Count Index
Oversupply
Tires
Regulations
Equipment
FuelDriver Wages
Cost Pressures from All Directions
Thanks!
Questions?