2009 Bob Costello Presentation

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Economic & Motor Carrier Economic & Motor Carrier Industry Update Industry Update March 3, 2009 March 3, 2009 Bob Costello Bob Costello Chief Economist & Vice President Chief Economist & Vice President American Trucking Associations American Trucking Associations

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You are viewing presentations from conferences that I have attended. Please enjoy & if we can help you with any logistics projects in the Americas please contact me at 678.364.3475Bill was also on the Board of Directors for the St.Vincent DePaul Foodbank in Roseville California helping with the fund raising and meals to the poor program. While based in Northern California he was successful in fund raising programs for the Crusade of Mercy and helped Father Dan Madigan at the Sacramento Food Bank also. For 2008, Bill is a member of the Board for WORKTEC on also an Advisory Board Member for Boys and Girls Club for Metro Atlanta-Clayton County Chapter. See www.worktec.biz or www.bgcma.org . Bill is also on the Board of Directors for the Southeastern Warehouse Association & represents Georgia for 2010-2012.Regards,Bill StankiewiczVice President and General ManagerShippers WarehouseEmail: [email protected]://www.linkedin.com/in/billstankiewicz2006http://twitter.com/BillStankiewiczhttp://www.topexecutivesnet.com/index.aspx

Transcript of 2009 Bob Costello Presentation

Page 1: 2009 Bob Costello Presentation

Economic & Motor Carrier Economic & Motor Carrier Industry UpdateIndustry Update

March 3, 2009March 3, 2009

Bob CostelloBob CostelloChief Economist & Vice PresidentChief Economist & Vice PresidentAmerican Trucking AssociationsAmerican Trucking Associations

Page 2: 2009 Bob Costello Presentation

Macroeconomic ViewMacroeconomic View

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-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

1960 1965 1970 1975 1980 1985 1990 1995 2000 2005

(Real GDP, 2000 dollars)

Worst U.S. Economy in DecadesWorst U.S. Economy in Decades

Sources: IHS Global Insight and ATA

Page 4: 2009 Bob Costello Presentation

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

(Real GDP, 2000 dollars)

Worst U.S. Economy in DecadesWorst U.S. Economy in Decades

Sources: IHS Global Insight and ATA

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Source: IHS Global Insight and ATA

-4%

-3%

-2%

-1%

0%

1%

2%

3%

2008 2009 2010

Baseline No Stimulus

Fiscal Stimulus ImpactsFiscal Stimulus Impacts(Real GDP, Annual percent change)

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-8

-6

-4

-2

0

2

4

6

8

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

(Real GDP, Annual percent change, 2000 dollars)

U.S. Economic Growth Slips Well Below PotentialU.S. Economic Growth Slips Well Below Potential

Sources: IHS Global Insight and ATA

Forecast Starts with Q1 2009

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-25.0%

-20.0%

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

2008 2009

Total Consumption Nonresidential Fixed Investment

Residential Fixed Investment Exports

Imports Federal Government

State & Local Government

(Real GDP, 2000 dollars)

Broad-based RecessionBroad-based Recession

Sources: IHS Global Insight and ATA

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Sources: IHS Global Insight, Department of Labor, and ATA

-3%

-2%

-1%

0%

1%

2%

3%

4%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Inflation No Longer a Concern, but Inflation No Longer a Concern, but Deflation is the New ThreatDeflation is the New Threat(Consumer Prices)

First annual drop since 1955

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0

1

2

3

4

5

6

7

8

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Fed Funds Rate 30-year Mortgage

(Average Quarterly Data; Percentage)

Interest Rates to Remain Low in Interest Rates to Remain Low in 20092009Interest Rates to Remain Low in Interest Rates to Remain Low in 20092009

Sources: IHS Global Insight and ATA

Page 10: 2009 Bob Costello Presentation

Consumer Outlook:Consumer Outlook:

Many HeadwindsMany Headwinds

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Sources: Department of Labor and ATA

129

131

133

135

137

139

2000 2001 2002 2003 2004 2005 2006 2007 2008

U.S. Employment U.S. Employment

Millions; Seasonally Adjusted

Through January 2009

2008 was the largest drop since 1946.

Unemployment rate will reach 10% before the labor market improves.

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-9

-8

-7

-6

-5

-4

-3

-2

-1

0

Q4:07 Q1:08 Q2:08 Q3:08 Q4:08 Q1:09 Q2:09 Q3:09 Q4:09 Q1:10 Q2:10 Q3:10 Q4:10

Baseline No Stimulus

(Cumulative job losses from the peak, millions)

Sources: IHS Global Insight and ATA

Fiscal Stimulus ImpactsFiscal Stimulus Impacts

Page 13: 2009 Bob Costello Presentation

Sources: Department of Labor, ATA, IHS Global Insight

0

1

2

3

4

5

6

7

8

9

10

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

U.S. Unemployment Rate U.S. Unemployment Rate

Percent

Page 14: 2009 Bob Costello Presentation

Sources: S&P/Case-Shiller National Index and ATA

50

75

100

125

150

175

200

1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007

Housing Price Index Housing Price Index

Average Annual Growth Rate: -8.5%2006 – 2008

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0

1

2

2001 2003 2005 2007 2009 2011

(Millions of Units)

U.S. Housing StartsU.S. Housing Starts

Sources: IHS Global Insight, Department of Commerce, and ATA

466,000 in January 2009

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Sources: Federal Reserve and ATA

10.0

11.0

12.0

13.0

14.0

15.0

1980 1983 1986 1989 1992 1995 1998 2001 2004 2007

Household Debt Service Ratio Household Debt Service Ratio Percentage of Disposable Personal Income

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-7

-5

-3

-1

1

3

5

7

2001 2003 2005 2007 2009 2011

Durable Goods Nondurable Goods

(Percent change, chained 2000 dollars)

Consumer Spending on Durables Is Hit Hard in This RecessionConsumer Spending on Durables Is Hit Hard in This Recession

Sources: IHS Global Insight and ATA

Fact: Households have lost $8 trillion of their net worth since the summer of 2007, which is enough to reduce consumer spending by $400 billion, or 4%.

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Industrial OutlookIndustrial Outlook

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-10

-8

-6

-4

-2

0

2

4

6

2001 2003 2005 2007 2009 2011

(Includes Manufacturing, Mining, and Utilities; Percent Change)

Industrial ProductionIndustrial Production

Sources: IHS Global Insight and ATA

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Sources: Federal Reserve Board and ATA

90.0

95.0

100.0

105.0

110.0

115.0

1998 2000 2002 2004 2006 2008

U.S. Manufacturing ProductionU.S. Manufacturing Production

Through January 2009; 2000 = 100

6.8% drop peak-to-trough

Already a 13.0% drop peak-to-trough with more to come

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10

12

14

16

18

2001 2003 2005 2007 2009 2011

(Millions of Units)

Light Vehicle SalesLight Vehicle Sales

Sources: IHS Global Insight and ATA

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Sources: Department of Commerce and ATA

1.2

1.3

1.4

1.5

1.6

1992 1994 1996 1998 2000 2002 2004 2006 2008

Total Business InventoriesTotal Business Inventories--toto--Sales RatioSales Ratio

(Includes retail, wholesale, and manufacturing; Through December 2008)

Inventories are bloated

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U.S. Trucking IndustryU.S. Trucking Industry

Page 24: 2009 Bob Costello Presentation

Source: ATA

ATA’s ForATA’s For--Hire Truck Tonnage Hire Truck Tonnage Index Index

Seasonally Adjusted; 2000 = 100

Through January 2009

9.3% drop peak-to-trough

Already a 13.4% drop peak-to-trough with more to come

95

100

105

110

115

120

125

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

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Sources: Department of Labor and ATA

1.30

1.32

1.34

1.36

1.38

1.40

1.42

1.44

1.46

2000 2001 2002 2003 2004 2005 2006 2007 2008

ForFor--hire Trucking Employment hire Trucking Employment

Millions; Seasonally Adjusted

Through January 2009

Employment fell 75,000 in 2008 and 25,000 in January 2009 alone.

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Source: ATA

ATA’s ForATA’s For--Hire TL Loads Index Hire TL Loads Index

Seasonally Adjusted; 2000 = 100

Through December 2008

Largest six-month drop since ATA began collecting the data in 1993:-23.2%

90

95

100

105

110

115

120

125

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

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Source: ATA

ATA’s ForATA’s For--Hire TL Dry Van Loads Hire TL Dry Van Loads Index Index

Seasonally Adjusted; 2000 = 100

Through December 2008

80

85

90

95

100

105

110

115

120

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

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Source: ATA

ATA’s ForATA’s For--Hire TL Refrigerated Hire TL Refrigerated Loads Index Loads Index

Seasonally Adjusted; 2000 = 100

Through December 2008

75

80

85

90

95

100

105

110

115

120

125

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

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Source: ATA

ATA’s ForATA’s For--Hire TL Flatbed Loads Hire TL Flatbed Loads Index Index

Seasonally Adjusted; 2000 = 100

Through December 2008

80

90

100

110

120

130

140

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

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Source: ATA

ATA’s ForATA’s For--Hire TL Tank Loads Hire TL Tank Loads Index Index

Seasonally Adjusted; 2000 = 100

Through December 2008

90

100

110

120

130

140

150

160

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

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Source: ATA’s Trucking Activity Report

Cumulative Decrease in Loads July Cumulative Decrease in Loads July 2008 through December 20082008 through December 2008

Dry Van

Reefer

Flatbed

Tank

-35%

-30%

-25%

-20%

-15%

-10%

-5%

0%

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Source: ATA’s Trucking Activity Report

Cumulative Decrease in Loads July Cumulative Decrease in Loads July 2008 through December 20082008 through December 2008

Med-Haul

Long-Haul

Short-Haul

-35%

-30%

-25%

-20%

-15%

-10%

-5%

0%

Page 33: 2009 Bob Costello Presentation

Source: ATA

ATA’s ForATA’s For--Hire Truck Revenue Hire Truck Revenue Index Index

2000=100; Through December 2008

90

100

110

120

130

140

150

2001 2002 2003 2004 2005 2006 2007 2008

Page 34: 2009 Bob Costello Presentation

Truck capacity will Truck capacity will tighten once a recovery tighten once a recovery commences, but until commences, but until

then it will be difficult for then it will be difficult for fleets.fleets.

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Truckload Demand vs Supply Truckload Demand vs Supply Through December 2008; 2000 = 100

Source: ATA’s Trucking Activity Report

Demand:Demand: ATA’s ForATA’s For--Hire TL Hire TL Loads Index (left scale)Loads Index (left scale)

Supply:Supply: ATA’s ForATA’s For--Hire TL Hire TL Tractor Index (right scale)Tractor Index (right scale)

90

95

100

105

110

115

120

2000 2001 2002 2003 2004 2005 2006 2007 2008

95

105

115

125

135

145

155

165

175

Page 36: 2009 Bob Costello Presentation

Source: Avondale Partners, LLCSource: Avondale Partners, LLC

200

400

600

800

1,000

1,200

1,400

Q1

00

Q1

01

Q1

02

Q1

03

Q1

04

Q1

05

Q1

06

Q1

07

Q1

08

Trucking Failures

Trucking FailuresTrucking Failures

Failures only includes fleets Failures only includes fleets with at least five truckswith at least five trucks

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Source: ATA’s Trucking Activity Report

-2.6%

-0.4%

-3%

-2%

-1%

0%

1%

2007 2008

Net Change in TL FleetNet Change in TL Fleet

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Source: US Trade Data

0

5,000

10,000

15,000

20,000

25,000

2004 2005 2006 2007 2008

U.S. Used Class 8 Tractor ExportsU.S. Used Class 8 Tractor Exports

Rest of the World

Russia

Nigeria

Page 39: 2009 Bob Costello Presentation

In the longIn the long--run, trucking run, trucking capacity will remain tight capacity will remain tight

due to the driver due to the driver shortage.shortage.

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Source: ATA’s Trucking Activity Report

9%

113%

87%

9%

58%65%

0%

20%

40%

60%

80%

100%

120%

140%

Large TL Small TL LTL

Q3:2007

Q3:2008

LineLine--Haul Driver TurnoverHaul Driver Turnover

AnnualizedAnnualized RatesRates

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Energy Price Energy Price Outlook Outlook

Page 42: 2009 Bob Costello Presentation

Source: Energy Information Administration

$0.90

$1.40

$1.90

$2.40

$2.90

$3.40

$3.90

$4.40

$4.90

Jan-94 Jan-96 Jan-98 Jan-00 Jan-02 Jan-04 Jan-06 Jan-08

OnOn--Highway Diesel PricesHighway Diesel PricesPrice Per GallonPrice Per Gallon

Record: $4.76(07/14/08)

$2.13(02/23/09)

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Source: IHS Global Insight

$0

$10

$20

$30

$40

$50

$60

$70

$80

$90

$100

$110

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

Crude Oil Prices Crude Oil Prices WTI, US$ per BarrelWTI, US$ per Barrel

Page 44: 2009 Bob Costello Presentation

Source: IHS Global Insight & ATA

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

$4.00

$4.50

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

Retail Diesel Prices Retail Diesel Prices US$ per GallonUS$ per Gallon

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