When it comes to economic growth, not many people think of trucking as an indicator, but recent statistics show a correlation between big wheelers and recovery. Surprisingly, only three sectors of the American economy contribute more to GDP than transportation: housing, food, and health care. More trucks on the highway mean more goods sold and shipped, more work for factories, more raw material shipped in, and, if the growth is sustained, more jobs.
The latest jobs report from the Bureau of Economic Analysis (BEA) yields some hopeful numbers for the trucking industry and for the economy at large. Transportation and warehousing jobs increased by 17,100 in June, and trucking jobs in particular are looking up with 7,000 new jobs. This continues a trend, with 19,000 new trucking jobs added during the past three months and 43,300 trucking jobs added over the past year.
The BEA data goes hand-in-hand with the increases in the warehouse and storage industry, as that segment added almost 28,000 jobs over the past year. While trucking led the way in the June BEA report, the warehousing and storage segment added 2,800 jobs, and support activities for transportation rose by 2,700 jobs. The three categories combined composed almost three-quarters of the June growth in the sector.
BEA data also supports the bright picture painted by other sources. According to an American Trucking Association (ATA) report discussed in the Journal of Commerce (JOC), annual trucking revenue hit $700 billion in 2014 for the first time ever. That represents a 3% increase over 2013 figures, and a 28.7% increase over 2009 when the effects of the recession dropped trucking income to $544.4 billion.
While higher rates contributed to the income gain, ATA suggests that most of the increase is due to higher freight volumes. The Chief Economist for the American Trucking Association (ATA), Bob Costello, noted that freight volumes rose significantly in 2014 and added that, "increases in freight, combined with continued tight capacity, helped drive revenues." Economic growth is finally beginning to show up as sustained transportation industry improvement.
Capacity is an important part of the equation. The recession took its toll on trucking, dropping capacity and squeezing some truckers out of the industry. With the pickup in demand, not only are jobs being added, but trucking firms have also been able to update their fleets. Orders for North American Class 8 trucks increased to 375,000 units according to the transportation research firm FTR, constituting the second-best year ever for sales.
While capacity is improving, it still has a way to go to hit the pre-recession capacity peak in 2006. The JOC Truckload Capacity Index, a standard measure of capability throughout the trucking industry, rose for every quarter in 2014 and reached its highest mark since 2011 with an 83.4 reading. However, that mark is still approximately 17% below the 2006 peak value.
How much of the total freight spending in America is directed at the trucking industry? According to the ATA report, trucks accounted for 80.3% of all U.S. freight spending while moving 9.96 billion tons of cargo. While the cargo is up from 9.68 billion tons in the previous year, the overall share is down from 81.2% in 2013, suggesting that other elements of the transportation industry are also faring well as the economy improves.
In essence, the trucking industry has finally recovered from the Great Recession and is looking forward to doing its part to "drive" economic growth and keep America "moving down the highway" toward recovery.