Transcript 2007 ATA Presentation Template

Economic & Motor Carrier
Industry Update
April 2008
Bob Costello
Chief Economist & Vice President
American Trucking Associations
ATA’s For-Hire Truck Tonnage
Index
Year-over-Year Percent Change; Through February 2008
40%
30%
20 months; avg
decrease=12.7%
13 months; avg
decrease=4.8%
20%
16 months; avg
decrease=6.3%
10%
0%
-10%
13 months; avg
decrease=4.9%
-20%
19 months; avg
decrease=9.9%
-30%
-40%
22 months; avg
decrease=2.7%
11 months; avg
decrease=6.0%
20 months; avg
decrease=13.9%
1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007
Source: ATA
ATA’s For-Hire Truck Tonnage Index Often
Leads Recessions and Recoveries
10%
Year-over-Year Percent Change
0%
Truck Tonnage
Recession
Economic Recession
-10%
1989
Sources: ATA and NBER
1990
1991
ATA’s For-Hire Truck Tonnage Index Often
Leads Recessions and Recoveries
10%
Year-over-Year Percent Change
0%
Truck Tonnage
Recession
Economic Recession
-10%
2000
Sources: ATA and NBER
2001
2002
ATA’s For-Hire Truck Tonnage Index Often
Leads Recessions and Recoveries
10%
Year-over-Year Percent Change
0%
Truck Tonnage
Recession
-10%
Projected Economic
Recession
2006
Sources: ATA and NBER
2007
2008
ATA’s For-Hire Loads/Shipments
Index
Seasonally Adjusted; 2000 = 100
115
110
12-month moving average
105
Includes TL and LTL
100
95
2000 2001
Source: ATA
2002
2003
2004
2005
2006
2007
2008
For-Hire Trucking Volumes
1%
2007
Includes TL and LTL
0%
-1%
-2%
-3%
-0.7%
-1.5%
Tonnage
Loads
Sources: ATA’s Trucking Activity Report & Monthly Truck Tonnage Report
Trucking Capacity
Growth in TL Fleet vs. Demand
2006
4%
3.4%
3%
2%
1%
0.3%
0%
Loads
Source: ATA’s Trucking Activity Report
Net Fleet Change
Growth in TL Fleet vs. Demand
2007
1%
0%
0.1%
-1%
-2%
-2.6%
-3%
Loads
Source: ATA’s Trucking Activity Report
Net Fleet Change
Capacity Conclusions
• Capacity likely to tighten quickly once
freight volumes improve
• Not only are companies reducing their
fleet size, failures are expected to rise
significantly, also reducing capacity
• Underlying fundamentals still support
tight capacity (driver shortage)
Economic Outlook
Summary
Significant Downside
Risks Remain, but Second
Half of 2008 Should be
Better
Manufacturing Production
120
Index; 2002=100
115
110
105
100
95
90
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Source: Federal Reserve
2006 Manufacturing by Country
$2.0
Trillions of US$
$1.73
$1.5
$1.10
$0.93
$1.0
$0.62
$0.5
$0.31
$0.31
Italy
UK
$0.0
US
Source: United Nations
China
Japan Germany
$325
Real Retail Sales
Billions of 2000 Dollars
$300
$275
$250
$225
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Sources: Department of Commerce and ATA
Inventory Trends
1.48
Total Supply Chain
1.44
1.40
1.36
Inventory-to-Sales Ratio
1.32
1.28
2
0
0
1
2
0
0
2
2
0
0
3
2
0
0
4
2
0
0
5
2
0
0
6
2
0
0
7
2
0
0
8
1.24
Source: Census Bureau
U.S. Employment
500,000
Month-to-Month Change; Through February
400,000
300,000
200,000
100,000
0
-100,000
-200,000
-300,000
-400,000
1999
Employment is a lagging indicator.
2000 2001 2002 2003
Sources: Department of Labor and ATA
2004 2005 2006
2007 2008
Households are cutting back
Average Annual Rates
5%
4%
3%
2%
1%
0%
Nondiscretionary spending:
Food
Energy
Housing
Medical Care
2006
Sources: ATA and NBER
2007
Discretionary
Spending
Housing Price Index
200
Average Annual Growth Rate: -5%
2006 – 2007
175
150
125
100
75
50
1987
1989
1991
1993
1995
1997
1999
2001
Sources: S&P/Case-Shiller National Index and ATA
2003
2005
2007
Inflation is a Concern
8%
6%
Consumer Price Index (CPI) February 2008;
Year-over-Year Percent Change
Core CPI excludes food and energy prices
Energy prices were up nearly 20%!
4.6%
4.4%
5.1%
4.7%
4%
2.3%
2%
0%
CPI
Core CPI
Source: Department of Labor
Food
Grocery
Stores
Medical
Services
Fiscal Stimulus Policies
Rebate Checks; Billions of Dollars
$120
$100
$80
$60
$40
$20
$0
2001
Source: ATA
2008
GDP vs Freight Producing Economy
Annualized Growth Rate
4%
3%
2%
1%
0%
-1%
-2%
-3%
-4%
Real GDP
Freight Economy
Q4 2007 Q1 2008 Q2 2008 Q3 2008 Q4 2008
Source: ATA
Fuel Price Outlook
Real Crude Oil Prices per Barrel
(2006 Dollars)
$100
$75
$50
Source: ATA
2008 YTD
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
1978
$0
1976
$25
On-Highway Diesel Prices
Price Per Gallon
Record
$3.90
$3.40
$2.90
$2.40
$1.90
$1.40
$0.90
Jan-94
Jan-96
Source: Department of Energy
Jan-98
Jan-00
Jan-02
Jan-04
Jan-06
Jan-08
Current Oil and Diesel markets:
The Facts
• Supplies are in good shape
• Oil market is no longer functioning on
supply-and-demand fundamentals
• Diesel-gas price differential not likely to
change significantly in the longer-run
• A bubble in commodities market is the
problem
• Need the dollar to strengthen
U.S. Dollars per Euro
$1.60
Record
$1.50
$1.40
$1.30
$1.20
$1.10
$1.00
1/3/2000 1/2/2002 1/2/2004 1/1/2006 1/1/2008
Source: The Wall Street Journal
U.S. Dollars per Euro & Diesel Prices
$1.60
$4.00
$3.80
$1.50
$3.60
$ per €
$3.40
$3.20
$1.40
Retail Diesel
$ per gallon
$1.30
7/2/07
$3.00
$2.80
9/20/07
Sources: The Wall Street Journal & EIA
12/9/07
2/27/08
What ATA has done:
• Called on the President to open the SPR and
suspend filling the SPR
• Called for more environmentally sound U.S.
crude production (ANWR & Continental Shelf)
• Called on DOJ to work with States on price
gouging
• Called for a 400-pound weight exemption for
auxiliary power units (APUs)
• Called on Secretary of Transportation to work
with Congress to enact a 65 national maximum
speed limit for all vehicles as a means to reduce
fuel consumption
What ATA has done:
•
Called on EPA to streamline its regulatory and
policy framework in reviewing and processing
applications for additional refinery operations
• Called on FMCSA and NHTSA to require all
newly manufactured trucks to be installed with
a speed limiter that can be set no higher than
68 miles per hour
• Called on EPA to redirect an additional $1
million from the Climate Protection Program to
the very successful SmartWay® Program
• Called for a single national fuel standard in lieu
of multiple boutique diesel fuel blends
Diesel Prices
Price per Gallon
$3.75
Forecasts
$3.50
$3.25
$3.00
$2.75
$2.50
2007:Q1
Q2
Q3
Source: U.S. Department of Energy
Q4
2008:Q1
Q2
Q3
Q4
Trucking’s Annual Cost for Diesel
(Billions of US$)
$134.9
$140
$130
$120
$106.0
$110
$100
$112.6
$91.8
$90
$80
$65.9
$70
$60
$52.2
$50
2003
Source: ATA
2004
2005
2006
2007
2008
2007 Fuel Bill
(Billions of US$)
$130
$120
$110
$112.6
*Includes U.S. passenger and
cargo airlines
$100
$90
$80
$70
$60
$50
$40
$30
Diesel
Only
$41.2
$20
$10
$0
Trucking
Source: ATA and Air Transport Association
Airlines*
Thanks!
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