Heavy Duty Trucking, December 2020

Hotlinenews TRUCKINGS MOST RESPECTED BUSINESS REPORT Freight economy rebound outpaces overall economy E ven during widespread lockdowns this spring we knew the third quarter of this year would post strong economic growth It was simple math Following the deepest economic contraction ever in a single quarter we were bound to see very strong quarter over quarter growth if commerce returned to anything approaching normal When we got the third quarter numbers for U S Gross Domestic Product we saw what we expected However when we drilled down to look at the segments of the economy linked to freight demand the results far exceeded our forecast GDP plunged by an unprecedented 314 on a quarter over quarter seasonally adjusted annualized basis in the second quarter but it soared by an unprecedented 331 in the third quarter However keep in mind the realities of math A gain larger than the loss preceding it does not indicate full recovery Growth is off a smaller base so you need a far larger percentage increase than the loss to get back to where you started FTR does not expect the level of GDP to recover to where we were at the end of 2019 until sometime in the second quarter of 2021 FTR also tracks what we refer to as GDP Goods Transport Sector the part of the economy that drives freight transportation volume The goods sector took a slightly deeper hit in the second quarter than the overall economy did at a drop of 411 One reason is that the sharp reduction in imports during the quarter bolstered GDP slightly because GDP counts imports as a negative However imports count as a positive in the GDP Goods Transport Sector In the third quarter GDP Goods Transport surged by an astounding 849 The actual level fell short of the same quarter last year by just 05 and it basically matches the fourth quarter of last year Why was growth so extraordinary One factor is the one noted above Goods imports surged in the third quarter Also due to the pandemic consumers have limited opportunity for travel and entertainment resulting in a shift of spending into goods rather than services Total consumer spending in September was 24 below February seasonally adjusted according to the Bureau of Economic Analysis However spending on services was 63 below February while spending on goods was 77 higher This substitution of goods for services likely will continue to some degree until a vaccine is widely available but that does not necessarily mean that goods demand will continue to grow Surging COVID 19 cases and the lack of more stimulus from Washington are significant risks that could slow that growth Another major factor in the strong GDP Goods Transport rebound is extraordinarily lean retail inventories relative to sales In three of the past four months the ratio of inventories to sales and retail was the lowest on record The push for more inventory heightens pressure for freight movements beyond the pressure resulting from higher sales themselves The GDP Goods Transport Sector is not the same as actual freight volume which still has not fully recovered for various reasons Spot market volumes especially in dry van and refrigerated are running at record levels but much of that pressure results from disrupted supply chains lagging driver capacity and the need to rebuild retail inventories The consumer sector has more than fully recovered but the industrial sector has not Avery Vise FTR For more information visit www FTRintel com HDT or call FTR at 888 988 1699 Trucking ramps up to distribute COVID 19 vaccines HDT DECEMBER 2020 10 WWW TRUCKINGINFO COM SOURCE BEA WITTE ECONOMETRICS FTR A s the country gears up for a massive effort to distribute new COVID 19 vaccines the trucking and logistics business will play a key role The first vaccines were expected to start being distributed in the latter part of December The fact that some of the vaccines require two doses and or extremely cold temperatures adds to the logistical challenges The public private vaccine partnership known as Operation Warp Speed is coordinating logistics for most vaccines through McKesson while Pfizer opted to handle its own distribution although it says it is working closely with federal and state government officials Logistics companies such as FedEx and UPS have been preparing as have refrigeration providers such as Thermo King and Carrier Transicold The Department of Transportation has taken regulatory measures to help ensure the safe rapid transportation of the COVID 19 vaccine including expanding the emergency exemption for trucking operations involved in the effort The Federal Motor Carrier Safety Administration extended its Emergency Declaration through Feb 28 2021 and added to the list of shipments covered under the exemption Vaccines constituent products and medical supplies and equipment including ancillary supplies kits for the administration of vaccines related to the prevention of COVID 19