Trucking Officials See Stable US Economy

Despite declining freight volumes in the U.S. and rising fuel costs, trucking industry representatives on Monday offered optimistic economic outlooks.

"I don't expect things to get worse," American Trucking Associations President and Chief Executive Bill Graves said. Graves, speaking at a welcome ceremony for Chinese officials at ATA headquarters in Arlington, Va., said he anticipates an improving economic picture by the beginning of 2009.

A Bear Stearns analyst echoed the sentiment about already weak demand not declining further in the near-term and trucking stocks rose Monday.

Almost 70 percent of manufactured and retail goods in the U.S. are carried by truck, making the industry an important economic bellwether.

While the U.S. economy is slowing, it also is still growing, said Mingde Yao, president of the China Road Transport Association. He does not expect a U.S. recession and said the slowdown should have only a minor effect on trade between the two countries.

The U.S. trade deficit with China through the first 11 months of 2007 totaled $237.5 billion, the highest annual imbalance ever recorded with a single country. The November deficit dipped slightly to $24 billion from a record $25.9 billion in October, but analysts predict more deficit jumps lie ahead as U.S. demand for Chinese goods has been unfazed by a string of high-profile recalls of a variety of products made there.

Chinese officials realize their nation's explosive economic growth in recent years cannot last forever and their government is now "emphasizing the quality and efficiency of the economy, not just the speed," Yao said through an interpreter. He led a delegation of Chinese government and transportation industry officials who are meeting with their U.S. counterparts this week to learn about the evolution of America's freight trucking system.

China last year spent $100 billion on road construction, and trucking freight has become the dominant mode of transportation there, he said.

A number of ATA members, including United Parcel Service Inc. and FedEx Corp. already operate in China and even more are interested in expanding there as the Asian nation's government continues to invest in transportation infrastructure, Graves said.

Expanding overseas is one way U.S. trucking companies can attempt to offset weakness at home. Total goods shipped by truck in the U.S. rose 3.3 percent in November from a year earlier, but the ATA last month said it expected "lackluster" freight volumes at least through the first half of this year.

Still, shares of many trucking companies soared Monday afternoon after Bear Stearns analyst Edward Wolfe raised his rating on the sector to "Market Weight" from "Underweight." Trucking stocks' values are nearing bottoms and while demand remains weak, it doesn't appear to be getting worse, said Wolfe, who held an "Underweight" rating on truckers for two and a half years.