American Trucking Association Projections through 2034

Projections released by the American Trucking Associations (ATA) on a Wednesday have set an optimistic tone for the trucking industry, forecasting substantial growth over the next decade. According to ATA Chief Economist Bob Costello, these projections indicate that trucking will remain the dominant force in the U.S. freight industry, moving 72.2% of all freight tonnage and generating 79.2% of revenue in 2022. Costello’s statement underlines the enduring importance of trucking in the nation’s logistics landscape. “That market share will continue to hold over the next decade, as the country will still rely on trucking to move the vast majority of freight,” Costello affirmed.

The ATA’s latest forecast anticipates a significant increase in overall truck tonnage, with estimates indicating growth from approximately 11.3 billion tons in 2023 to a staggering 14.2 billion tons by 2034. This growth will account for 72.4% of the freight tonnage in 2023, increasing to 72.6% by the end of the projection period. The accompanying rise in trucking revenues is equally impressive, with figures expected to swell from $1.01 trillion in 2023 to $1.51 trillion in 2034, constituting a substantial 78.8% of the freight market.

Despite the ongoing shift of some freight to intermodal rail, ATA predicts rail intermodal revenues to increase from $21.7 billion in 2023 to $35.2 billion in 2034. However, as coal and bulk petroleum shipments decline, rail carload tonnage is expected to decrease from 11% of total freight to 10.1% by 2034.

In contrast, air cargo tonnage is projected to experience a steady rise from 17.6 million tons in the current year to 23.7 million tons in 2034. Pipelines will also witness an increase in their share of freight tonnage, growing from 9.8% in 2023 to 10.4% in 2034.

ATA President and CEO Chris Spear emphasized the importance of these projections for decision-makers, stating, “Knowing where our industry and economy are headed is critical for decision-makers. This Freight Forecast should be top of mind for policymakers in Washington, Sacramento, and wherever decisions affect trucking.”

However, these optimistic forecasts arrive when the trucking industry grapples with various challenges. Truck operating costs remain significantly above spot rates, with the margin between cost and contract rates tightening. Contract rates have been steadily declining and are approximately 16% lower year-over-year.

On the bright side, spending on goods increases after two years of stagnation. Uber Freight’s 2023 Q4 market update & outlook reported that in Q3, spending rose by 0.5% quarter-over-quarter and 2.3% year-over-year, driven by durable goods, particularly in the automotive sector. This surge in spending is fueled by consumers saving less and spending more, as the personal saving rate dropped to 3.4% in September, half its pre-pandemic level.

Truckload demand, after a consistent increase throughout 2023, turned positive year-over-year for the first time in 9 months. It is believed that truckload demand reached its nadir in April 2023 and began to rise in the subsequent months. In Q3, truckload demand increased by 1.2% quarter-over-quarter and remained flat year-over-year. Despite a 0.5% decrease in supply in Q3, it was still 1.4% higher than the previous year. The manufacturing economy, however, contracted for the 12th consecutive month, according to the ISM Purchasing Managers Index. Trucking employment faced challenges, with a decline of 24,000 jobs (-1.5%) in Q3, primarily attributed to the Yellow bankruptcy. In October, the situation worsened, with a further decline of 5,000 jobs, marking a 1.7% year-over-year decrease. Long-distance truckload employment, a better predictor of spot rates, has declined, albeit only 1.1% below its all-time high.

As reported by Uber Freight, less-than-truckload (LTL) tonnage continued to decline in Q3. However, individual carriers showed signs of improvement in September due to the closure of Yellow. Overall, LTL tonnage and shipment count are expected to remain at reduced levels through the end of the year and into the following year, with the average shipment size also continuing to decline.

In summary, while the ATA’s projections for the trucking industry paint a rosy picture of growth and dominance in the coming years, the industry must navigate a challenging landscape characterized by rising operating costs, fluctuating demand, and ongoing shifts in the transportation ecosystem. The ability to adapt and innovate will be key for trucking companies to realize the potential outlined in these forecasts.