Continued growth appears to be the main thesis looking out over the next decade for the freight transportation market, according to the American Trucking Associations (ATA) ATA Freight Transportation Forecast 2017, which was released today. Data for this report comes from both the ATA and IHS Global Insight.
The numbers issued in this report paint a largely positive picture for freight transportation over all, including how freight volumes are projected to grow 2.8% in 2017, with 3.4% annual growth through 2023, followed by a 2.3% annual rate in subsequent years. What’s more, the report is calling for 15.18 billion tons of freight to be moved by all modes in 2017, with the expectation that it will head up to 20.73 billion tons, an increase of 36.6% in 2028.
The 2.8% growth will be paced “by solid growth across all modes resulting from general economic growth as well as improved conditions in the manufacturing sector,” the report stated. Looking at projected growth on a modal basis, the report stated the following:
The report made it clear that over the forecast period, capacity shortfalls will develop, with some selected tightness in freight handling capacity starting to emerge, suggesting that capacity expansion will be required if the modes are going to be able to handle anticipated growth.
On a media conference call, ATA Chief Economist Bob Costello said that this report takes a bottom up approach, first with a general economic forecast that is then fed through a transportation model.
“It is not just looking at the modes and saying ‘this is by how much we think the modes will grow,’ especially when it comes to a modal shift,” he said. “There is no assumption that one mode will grow over another mode, because [of some specific factor like tightening truck or rail capacity]. There is none of that. It is assumed that all the modes will haul all the freight they are asked to….that is a big assumption, but it is a proper one as it is based on economic growth.”
Addressing the projected growth in pipeline, the report said it is attributed to volumes expecting to benefit from rising imports, expanding shale gas and associated liquids output and anticipated chemical industry capacity expansion programs.
And for projected intermodal growth it pointed to the mode working its way into shipper, motor carrier, and consignee acceptance going back to July 2008, with the caveat that a major, and quick, uptick in the U.S. and global economies could pressure speed-to-market levels in a shift back from intermodal to over-the-road and, in turn exacerbate the ongoing truck driver shortage.
“When you see a slight decrease in other modes for modal share, with trucking going from 70.6% of all tonnage in 2016 to 67.1% in 2018, and most other modes following a similar pattern, remember it is not because of an actual decrease in freight, it is because pipeline is expected to grow so much over the forecast period,” Costello said.