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Consumer spending, manufacturing challenges and government initiatives impact industry
U.S. Xpress Enterprises, Inc. (NYSE: USX) today released its Q2 2021 economic forecast, highlighting a variety of trends and updates specific to the trucking industry. The full, detailed forecast can be found on the company blog. Four key insights entering Q2 include:
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1. Economic growth and consumption patterns drive truckload demand
Economic metrics point to a continued V-shaped recovery with GDP expected to grow in the months to come. Consumer spending trends upwards with imports reaching new records this summer. Sustained, robust growth will require shippers’ increased manufacturing of products and restocking of shelves. If consumption continues at this pace, then rates and volumes will likely remain elevated for the remainder of the year, even with an anticipated mild decline in volumes in Q3.
2. The truckload capacity ceiling
Ongoing driver shortages and backlogs on tractor orders continues to exacerbate the capacity issue. Additional factors including impacts of the $2 trillion government infrastructure bill and a considerable increase in carrier liability insurance minimums could lure drivers to other careers and put many smaller carriers out of business. The coming three months of reporting on tractor deliveries and driver recruitment and retention will greatly impact truckload supply going into the holiday season.
3. Frictional versus structural changes
The lockdown economy drove significant increases in online shopping with merchants raking in $861 billion in ecommerce sales, a 44% increase over 2019. As vaccines roll out and Americans revive spending on travel, dining and experiences, it’s expected we’ll see a drop in online purchases. But how the habits of 2020 will continue or evolve is yet to be determined. For the trucking industry, autonomous technology will have a long-term structural impact with leading innovators like TuSimple actively testing self-driving trucks on specific lanes. Though we’ll always have a need for professional drivers, autonomous could influence capacity and availability of drivers down the road.
4. Government spending to have far-reaching impacts on trucking
Broad spending initiatives like the new infrastructure bill could spark economic activity while further exacerbating driver supply issues. Areas where the dollars are allocated would likely drive demand for shipping beyond near record levels we’ve been experiencing in the past few months. Job implications could be impactful for freight – unprecedented construction hiring for public works projects would further shrink the driver pool.
"As our nation emerges from a year-long lockdown, consumer spending habits will shift and manufacturing and shipping trends will continue to evolve," said Eric Fuller, President & CEO of U.S. Xpress. "This quarter will be important in determining which government spending initiatives progress, how new technology shapes the trucking industry and how both will impact entire global supply chain."
U.S. Xpress Enterprises, Inc.
Through its subsidiaries, U.S. Xpress Enterprises, Inc. (NYSE: USX), offers customers over-the-road, dedicated, and brokerage services. Founded in 1985, the Company utilizes a combination of smart technology, a modern fleet of tractors and a network of highly trained, professional drivers to efficiently move freight for a wide variety of customers. U.S. Xpress implements a range of digital initiatives and technology to drive innovation in the industry, streamline the value chain for customers and improve the overall driver experience. For more, visit usxpress.com.
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Brad Carmony, VP Brand Communications