The 60 percent drop in oil prices in the past year has hurt some sectors of the U.S. economy and tamped down growth, according to Thom Albrecht, transportation analyst at BB&T Capital Markets.
Industrial production should firm up a bit next year, helping to generate more domestic freight than in 2015, Thom Albrecht, transportation analyst at BB&T Capital Markets, said at an industry conference Tuesday.
The biggest factor driving down industrial production is the collapse of oil prices, which has slowed oil production and ancilliary orders for machinery and supplies, according to experts.
Industrial production was negative in the first half of the year compared to a 4.5 percent increase in 2014, which partially explains why truckload capacity has been adequate despite concerns about an apparent lack of qualified drivers.
During a roundtable panel at the Intermodal Association of North America’s Expo in Fort Lauderdale, Albrecht said he expects industrial production to recover modestly to a little above 2 percent growth by mid-2016 as the oil-price dividend is finally felt by consumers. Until then economic growth will remain inconsistent, he said.
John Larkin, an analyst at investment bank Stifel, said he doesn’t see any near-term catalysts for the sluggish economy.
Lower oil prices will eventually help manufacturers, especially chemical producers that are investing heavily in new plants, rail analyst Tony Hatch said. The new production should start coming online between 2017 and 2019, which will provide the rail industry with new business, said Hatch.
Analyst predicts modest freight bounce in 2016
