State of the Trucking Economy

According to Bob Costello, chief economist for American Trucking Associations, there are varying reports on the health of trucking and of the US economy. At last week’s TCA conference in Phoenix, Costello presented what he believes is the state of the trucking economy, saying that truckers and their customers need to understand the difference between the overall economy and the trucking economy. Those differences revolve around how Gross Domestic Product (GDP) related to the trucking industry is focused on products rather than services.

While the GDP seems to be slowing, Costello said “I say ignore [GDP slowing] because almost 70% of what is embedded in those GDP numbers are services, and you’re not putting services in trailers!” When discussing trucking, he said “we need to focus in on the goods economy.”

Costello cited how the U.S. economy responded during the COVID-19 pandemic in 2020 as an example. Citizens’ consumption of tangible goods increased dramatically, but because of public health concerns, they weren’t traveling or going to concerts or sporting events, activities Costello calls the “experience” economy. Two years later, when the pandemic was winding down, spending on “experiences” boomed, while the purchase of goods slowed sufficiently when combined with other factors such as over-capacity to send trucking into a recession.

Costello said he had some level of optimism about an end to the recession this year, but recent policy changes, particularly the new tariffs placed on Mexican and Canadian goods, have introduced continued uncertainty on when the recession might end and goods movement return to more regular levels. Some market estimates predict that the tariffs may result in as much as 5% of freight boycotting US ports and opting for ports in Mexico or Canada. Trade rumors also suggest that US ports may charge higher fees to cargo ships, further pushing international trade to ports outside the US.

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