GE Capital freight analysts expect that the “Goldilocks” freight economy – that’s to say, a market that currently feels “not too hot, not too cold, but just right” in trucking – should continue well into 2015.
However, GE Capital’s quarterly Industry Research Updates and Monitors report stresses that current freight conditions – characterized by stronger freight volumes, better pricing leverage due to tight capacity, and lower fuel prices than previous years—is not without its challenges.
A shortage of qualified drivers, historically high levels of driver turnover, upward pressure on costs such as pay and equipment and maintenance – as well as operating inefficiencies related to an increase in U.S. regulations – are factors capping growth in the industry.
As Fleet Owner magazine reports, GE Capital went on to describe what it called the “primary freight trends” that will influence trucking for the remainder of 2015, including gradual acceleration of U.S. gross domestic product and new construction and increasing vehicle sales and consumer retail activity being the primary drivers of freight tonnage.
The article continued:
In terms of commercial vehicles sales, GE Capital believes demand for new medium- and heavy-duty trucks should remain positive, albeit slower, during 2015.
“Barring a severe economic downturn, future production cycles are expected to be less volatile from peak to trough than in the past due to better forecasting, improved communications systems that provide better visibility of channel inventory and lessons learned from the past,” the firm noted in its report.
Finally, the firm thinks the gains in freight rates witnessed during 2014 will likely moderate in 2015 as last year’s strong truck orders begin to at least partially relieve industry capacity constraints.
However, GE Capital stressed that the “stiffening regulatory environment” combined with driver shortages that are particularly acute in the long-haul market, liability risk and insurance plus more expensive new and used equipment, will help keep rates from dipping much throughout the year.
“Additionally, upward pressure on driver wages will help justify higher freight rates despite downward pressure on fuel surcharges,” the firm noted.