Fleet Management News & Business Info | Commercial Carrier Journal
Issue link: http://read.dmtmag.com/i/795447
60 commercial carrier journal | march 2017 BUSINESS | ECONOMIC OUTLOOK with extra cardboard and cushioning." Carriers in the less-than-truckload and final-mile delivery market seg- ments stand to capitalize the most in the growing e-commerce market. "LTL is the winner in terms of e-commerce growth, with fulfillment center replenishment and non-con- veyorable freight that can't be moved through UPS or FedEx, whether they deliver last mile or hire cartage," says Larkin. "Goods such as lawn equip- ment and exercise equipment aren't easily delivered through UPS." THE TRUMP EFFECT When Trump won the presidential election in November, carrier sentiment for future business conditions – for the most part – changed overnight. With campaign promises to increase U.S.- based manufacturing, create tax reforms, repeal the Affordable Care Act, roll back burdensome regulations and create meaningful infrastructure investments, Trump was a clear favorite in the truck- ing industry, according to the 2017 CCJ Economic Outlook survey. Of the 321 survey respondents who cast a ballot, 75.1 percent voted for Trump, compared to only 6.2 percent who voted for Hillary Clinton. Of the remaining responses, Gary Johnson received 2.2 percent, 2.5 percent were write-ins, and 14 percent opted not to say who they voted for, even though survey results remain anonymous. Of respondents from for-hire car- riers, 79.1 percent voted for Trump, compared to 6.4 percent for Clinton. When the results are dissected by fleet size across all fleet types, respondents from fleets with more than 100 power units favored Trump slightly more than those from fleets with up to 100 power units, at 76.7 percent and 73.6 percent, respectively. "A $1 trillion infrastructure program ought to generate freight," says Larkin. "If I believe tax rates are going down, that we've seen the worst of labor laws and that regulations will be rolled back, I am more confident in investing in capital, hiring drivers and growing my business." Starks agrees that infrastructure spending would be a much-needed shot in the arm for the trucking industry. "It is an easy and tangible way to put people to work and create a public benefit," he says. "From a transportation standpoint, it creates freight in the system. e con- cern I have is we have seen no specifics on it. How do you pay for it? You have to have a mechanism, and public-private partnerships aren't the way to go." But Trump's presidential honey- moon hasn't gone as smoothly as his supporters had hoped. Unfavorable media coverage, protests in major cities and a still-divided Congress threaten to derail his voter mandate. And the administration has yet to put together an infrastructure package or introduce a new healthcare plan to replace Obamacare. While infrastructure spending and regulatory relief would help the economy overall, the Trump administration's trade policy actually poses the biggest threat to trucking, Costello says. "Trade and trucking are synony- mous, so you have all those positives and that one negative," says Costello. "Trade is a two-way street. We are a net importer, but we export a lot. If that starts to take a hit, that is a detriment." Survey respondents share analysts' trade concerns. "As long as Trump does not close down the borders to trade, he will be positive," said a respondent from a for-hire carrier. "His rhetoric on a border tax is concerning." "While I believe there needs to be some tweaking of NAFTA, I hope that he is wise in doing so and doesn't do anything stupid," said another. If industry analysts are correct and capacity tightens alongside pro-busi- ness policy in Washington, an inven- tory correction and resurgence in the manufacturing and energy sectors, 2017 could shape up to be a good year for trucking. "I wouldn't call it fast, but there are some promising signals in freight recovery and some strength in the broader economy," says Starks. "But one of the areas we are concerned about is how fast it can accelerate and how fast it can slow down." "2017 will be a better year for trucking than 2016," says Costello. "Consumer spending and housing re- main solid. Manufacturing, while still relatively weak, will improve a little bit. e main thing is the inventory cycle is getting under control. Add it all together, and volumes will be better in 2017." 2016 Grew Held steady Shrunk 2017 Grow Hold steady FOR-HIRE FLEETS READY TO GROW 2016 Buoyed by improving business conditions and economic optimism, for-hire carriers are far more likely to grow fleet size in 2017 compared to last year. 28.7% GREW 49% HELD STEADY 22.3% SHRUNK 2016 Grew Held steady Shrunk 2017 Grow Hold steady Shrink 2017 47.2% HOLD STEADY 48.3% GROW 4.5% SHRINK DIGGING DEEPER To see the full results of the 2017 CCJ Economic Outlook Survey, visit www.ccjdigital.com/2017EconomicOutlook.