A light approach to regulation and big tax cuts will be a boon for the trucking industry under a Donald Trump presidency, but Trump’s unpredictable management style poses a big long-term risk to the economy and motor carriers, freight economist Noel Perry said Wednesday.
“We are in an extraordinarily risky environment. Whatever you say about the politics of Donald Trump, his management style is highly volatile and therefore risky. It may give better outcomes, but it’s highly risky,” said Perry, chief economist at Truckstop.com and principal at consultancy Transport Futures, during an appearance at FreightWaves’ F3: Future of Freight Festival. “The trucking supply and pricing situation is a mess right now, and the geopolitical situation is the worst that I’ve experienced since back in the Vietnam days … and the demand side of the economy is [lackluster]. [The consumer] has been overbuying for a long time. So my message to my customers is that you need to be prudent for the next couple years, because all the risks are on the downside.”
The Trump administration is likely to water down the Environmental Protection Agency’s rulemaking on greenhouse emissions standards for heavy-duty trucks and kill plans to require that engines be equipped with a device to control a truck’s maximum speed, Perry said. California’s AB5 law that reclassifies many independent drivers as employees will also spread more slowly to other states, he added.
Perry, who went to school with Trump at the University of Pennsylvania in the late 1960s, said the president-elect will quickly move to extend the 2017 tax cuts from his first presidency, which will stimulate the economy for about 18 months and generate more freight for motor carriers.
But the Trump administration’s positive effects on trucking come with a hidden downside – attracting more mom-and-pop truckers into a saturated market, noted Zach Strickland, director of freight market intelligence at SONAR.
Less regulation may make it easier to operate day to day, but that’s “only going to feed into a bit of an oversupply because regulations in general are barriers to entry” that advantage larger trucking companies, he told a large audience of logistics executives in Chattanooga, Tennessee, and listening online.
Tax cuts, Strickland added, present the same dilemma. After the 2017 cuts, a massive number of small truckload carriers went out of business within two years because there were too many companies fighting for available business despite increased demand.
“The short-term gains feel really good, but that’s what leads to a lot of people entering the truckload market, like they did during COVID, and then oversaturating the market with a lot of capacity. So that’s the one caveat. I think in the near term, we’ve got a pretty bullish outlook,” said Strickland.
Although the freight cycle is slowly trending upward, Perry said motor carriers need to be careful in planning equipment purchases because the risk of an economic downturn rises quite dramatically by mid-2026. Both experts said an unforeseen event, such as pandemic or natural disaster, could hasten a potential recession.
They also agreed there won’t be much of a peak shipping season for the holidays because retailers since the pandemic have been using the summer months to stock inventory for big sales events rather than risk delays by shipping products from Asia in the third and fourth quarters.
“Peak season is not a demand side-driven event. That is a big misconception. If you look at data, you’ll see that demand actually declines during the month of December. It’s also down in early January compared to the beginning of July,” Strickland said.
“The difference is the shipper’s sense of urgency at the end of the year has increased exponentially because you have holidays, you have an end of another quarter, and then you have an end of a fiscal year. They have to get their goods moving to protect revenue. Plus, drivers take vacations. Carriers boundary all their drivers within a 500-mile radius so they can get home time. That’s the natural peak season mechanism. It’s not necessarily that we have this huge amount of freight moving in the country, but more by a supply side constriction,” Strickland added, noting that carriers are rejecting more loads, and spot rates are increasing now.
Click here for more FreightWaves/American Shipper stories by Eric Kulisch.
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