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Feb
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NoSpinFORECAST’s Robert F. Dieli, PhD was quoted in this MEMA article:

Challenging (Not Necessarily Bad) Year Predicted for Trucking Act

Date: January 30, 2019
Source: Denise Rondini, Truckinginfo.com

The economic activity affecting trucking could see a challenging year, according to Bob Dieli, president and founder of RDLB Inc., an economic research and management consulting firm, speaking at the Heavy Duty Aftermarket Dialogue in Las Vegas on Jan. 28.

But Dieli was quick to add that challenging does not necessarily mean bad.

Truckable Economic Activity is MacKay & Company’s proprietary measure of trucking activity, designed to measure all types of economic activity that move by truck, providing a more industry-applicable economic indicator than the broader Gross Domestic Product.

Dieli expects supply chain issues to dominate. in part because of trade and tariffs matters, but also because of structural issues that already exist inside the industry.

At this time last year, he pointed out, the one area of TEA that he had concerns about was the government piece. This year, he has concerns about the investment, export, and import sectors. He believes these factors could put as much as 50 percent of TEA at risk. The concern with exports is illustrated by what happened when the U.S. imposed a 10 percent tariff on steel from China. China then imposed a 25 percent retaliatory tariff on soybeans. China was a major market for U.S. soybean imports. On average, food exports account for 10 percent of total exports. In addition, imports of nonautomotive consumer goods account for 25 percent of truckable imports.

There is also a concern that a large inventory of imported goods has been built up. “How much is a prebuy because of tariffs? How much is unsold because of tariffs?” he asked.

Residential structures are another area of concern, and they represent 25 percent of truckable fixed investment.

Jobs and trucks are good economic forecasting tools, Dieli said. “Drivers are hired when there is freight to be hauled, with rise in freight volume is rise in transportation employment.” And, he added, “Trucks are purchased when there is freight to be hauled.”

Based on what he is seeing, Dieli also said we are we are in the boom phase of the business cycle. During the boom phase, the economy continues to expand. However often in the boom phase of an economic cycle, employment levels will fall. A typical economic cycle is expansion, boom, peak, trough, recovery, expansion.

He suggested that meeting attendees ask themselves these three questions during the boom phase:

  • Stability — How is your biggest customer doing? If they are having a problem, you, too, are going to have a problem.
  • Sustainability — How is your biggest supplier doing? Are they impacted by tariffs?
  • Hostility — How is your biggest competitor doing? He told attendees to figure out who their biggest competitors are, look at what they are doing, and make sure to understand the competitive environment.

Read the full article at Motor & Equipment Manufacturers Association

 

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