Why Isn’t Trucking Demand Stronger Despite Economic Growth?
The Disconnect Between GDP and Trucking Demand
The trucking industry is often viewed as a mirror of the economy. When consumer income rises, trucking demand should theoretically follow. However, the expected correlation between these two factors has recently weakened, leaving many puzzled.
Key Insights from the Report:
- Shift in Consumer Spending: While Disposable Personal Income (DPI) has surged, consumers have redirected their spending from goods to experiences and services, which aren't transported by trucks.
- Impact of Housing Market Slowdown: Rising interest rates have curbed housing starts, leading to reduced demand for goods associated with home building and furnishing.
- Retailer Inventory Mismanagement: Initially overordering to combat out-of-stock situations, retailers then drastically cut back on orders, further weakening demand for trucking.
The Road Ahead for Trucking
Despite these challenges, the report suggests that the ongoing growth in DPI will inevitably translate into increased trucking demand. The dry van spot market has already shown signs of recovery, with volumes up significantly year-over-year. As consumer income continues to grow, the trucking industry is poised for a resurgence.
This report provides a comprehensive analysis of the current disconnect between economic indicators and trucking demand. It highlights the complexities of consumer behavior and retail dynamics while offering an optimistic outlook for the trucking industry as the economy continues to evolve.
The National Motor Freight Traffic Association (NMFTA)™ in partnership with Donald Broughton of Broughton Capital proudly brings you the U.S. Economic Update Report for Q3 2024 which features insights specific to the trucking industry.
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* This report has been written and prepared by Donald Broughton of Broughton Capital
Donald Broughton founded Broughton Capital at the beginning of 2017, after spending over two decades as one of Wall Street’s top analysts – first at A.G. Edwards where he covered the Transportation industry, led the Industrials Research Team, and served on the firm’s Investment Strategy Committee. Beginning in mid-2006 Broughton published reports warning of an impending economic slowdown and by early 2007 published reports explaining why a recession was imminent.
His stock-picking performance has been repeatedly recognized by The Wall Street Journal as an “All-Star Analyst,” by Forbes in its “When Picky Analysts Pick” series, and ranked by both Zacks Investment Research and Starmine as a 5-Star Analyst (their highest rating). He is a frequent guest on national broadcast media, such as CNBC and Nightly Business Report. Many in the transportation industry know him for his quarterly tracking of trucking bankruptcies. Notorious as a hard-hitting forensic accountant, as a ‘Sell-side analyst’ he used ‘Sell’ ratings more often than any other Transportation analyst, and is highly regarded for his forecasts that translate goods flow data into economic forecasts.
About the Quarterly Reports
NMFTA is committed to providing valuable insights to the freight industry through its quarterly economic update reports. These reports aim to illuminate lesser-known trends across the broader freight market that could potentially impact businesses. Additionally, they offer interpretations of current trucking industry trends, helping businesses understand the underlying factors shaping their experiences.
Through this initiative, the NMFTA strives to empower businesses with comprehensive and relevant market intelligence, enabling them to navigate the dynamic and often complex freight landscape with greater confidence.