LAS VEGAS, NV – Several indicators suggest that the U.S. trucking industry is approaching the end of an economic downturn. But broader economic growth is still being slowed by uncertainty around the U.S. election — and the global rise in populism, nationalism and isolationism, a leading U.S. economist says.

“There is this uncertainty about policy and where we’re going,” said Diane Swonk, in a presentation at the American Trucking Associations’ Management Conference and Exhibition. “It’s not just the U.S. It’s global in scope.”

Any sense of isolationism is certainly troubling in the context of cross-border truck traffic. Trucks haul 70% of the surface trade between Canada and the U.S., and since 1995 truck-transported shipments from Canada have grown 65%, with Canada-bound freight up 93%, said Bob Costello, chief economist for the American Trucking Associations. The numbers for shipments across the border with Mexico are even more dramatic. Trucks haul 83% of the surface trade there, while U.S. bound shipments were up 395% and Mexican-bound shipments surged 355% in the same period since 1995.

Looking at recent years, the trucking industry’s economic story has not been one of growth.

More recently, U.S. fleets have seen a slowdown in freight, following a blip earlier this year that was likely linked to shifting inventory levels. “Now we’re even negative on a year-over-year basis,” Costello said. Freight volumes are flat. Contracted freight is steady, but spot loads are down 12.3% year to date.

“I think the spot market has turned the corner,” he said, offering some good news. They are at their highest levels since May 2016. “I think this turns first.”

Dry van volumes, which represent the largest share of truck freight, are up 1.2% this year, but most of that growth came earlier in the year. “This sector has really been hurt by that glut in inventory,” Costello said. In contrast, they were up 2.5% in 2014 and flat in 2015.

“It’s amazing we didn’t have a recession,” Swonk said of the drawdown in inventories. “There has been a real hesitation [by businesses] to commit.”

Flatbed volumes depend on the sector a fleet serves. Those who haul steel are struggling, while construction-related business is “not too bad”, he said. That has led to a 6.6% bump in flatbed volumes, while they were down 2.6% in 2015 and 3.7% in 2014. Swonk noted that the steel industry was closely tied to the oil industry, and when combined with a strong dollar the effect was devastating.

Refrigerated freight volumes were puzzling. In 2015 they were up 14.3%, and this year they are up 0.7%. “This group was the best and now it’s coming back to earth a little bit,” Costello added.

Tank truck volumes are up just 0.3% this year, after a 1.1% drop last year and weak 1.9% growth in 2014. A drop in fracking activities in the oil and gas sector are to blame for some of that.

Then there are the Less-than-Truckload volumes, which have been hurt by the slowdown in manufacturing. The 6.3% surge in 2014 volumes dropped to 0.9% in 2015, and volumes have dropped 0.5% so far this year. Much of the 2014 growth came as these fleets dealt with a lack of truckload capacity, Costello said. But there is good news for Less-than-Truckload operations. “This group, longer term, is going to see some decent growth,” he predicted.

Capacity

As soft as freight volumes have been, Costello suggests that capacity will play its own role in any recovery. Class 8 truck sales in the U.S. rose from about 185,000 units in 2013 to 253,000 units last year. This year it has dropped to 200,000 units, which he sees as a general adjustment. Since last year, average used trucks have 16% fewer miles on the odometer, which has its own influence on new truck sales.

Truckload operations have about 3% more tractors on the road since 2014. Simply put, there are more tractors than loads, and that same thing happened in 2012 and 2013. It’s not all about the biggest fleets in the industry, either. The Top 25 for-hire truckload carriers in the U.S. operate less than 9% of the over-the-road tractors, he noted. While their capacity is down 4.4%, small fleets added 6.5% year to date.

Some of the demand for drivers to sit behind the wheels of these trucks has been eased with the slowdown in the energy sector, when workers left the struggling oil fields, Costello said. Annual truckload driver turnover rates are at 86% this year, while the Less-Than-Truckload sector hovers around 10%. (“The drivers make more money, they’re home more often,” Costello says of the latter group.)

Another factor affecting capacity is the number of trailers. “There’s just too much supply out there,” Costello said. The number of truckload trailers jumped 10% since 2012, and fleets of every size are adding the equipment. Factors such as Electronic Logging Devices will play a role in this growth, with more operations adding trailers for drop-and-hook work, he added.

Year to date, truckload revenue per mile is down 3.35% in dry vans and 2.6% in flatbeds. Reefer fleets have seen the revenue grow 2%, and tanker fleets are flat. But spot rates have been hit hardest in this measure. Dry vans are down 13.2%, flatbeds are down 12.7%, and reefers are down 12%.

The total truckload revenue per tractor is down 3.3% year to date, compared to 3.3% growth last year, and an 8.7% bump the year before that.

The general economy

Then there’s the question of where the economy itself will go.

The broader economic picture continues to struggle. “This year will likely be the weakest year, or likely closest to it, since the Great Recession,” Swonk says. In the setting of Las Vegas she offered a 50/50 chance of another recession, too. “I am worried the rest of the world is not doing so great,” she said.

But Swonk is bullish about the energy sector because it is increasing productivity and has likely hit the bottom in the number of rigs. While OPEC has slowed production, Saudi Arabia will continue to want to put pressure on Iran, she added.

The economist offered several observations about other economic pressures. Housing starts struggle in part because of members of Generation X who lost their homes during the economic downturn or never owned a home in the first place. Will they return to the housing market? And the U.S. Federal Reserve is worried about an oversupply of commercial buildings, especially multi-family homes.

Infrastructure spending will be one of the keys to economic growth, she said, suggesting that “austerity is no longer in fashion”. She doesn’t expect the U.S. Federal Reserve to dramatically raise rates anytime soon, either, and predicts that corporate tax reform will bring money back to the U.S.

While consumers have been driving growth, retail sales in the U.S. are only 2% above where they were a year ago. Swonk sees that sector at a “tipping point” where seasonal shifts in retail sales will pale in comparison to the shift between physical stores and online sales. “You can literally order online things that you couldn’t before,” she explained. “This is a really hard transition for retailers.”

There was a time when technology helped to add people to the labor market. Now it is replacing them, Swonk added.

It isn’t the only factor to consider. People in their prime employment years were hit particularly hard during the Great Recession, and there have been struggles to reengage them. Millennial-aged workers are replacing those of Generation X, but that will slow down overall wage growth because they’re cheaper, she noted.

“I think manufacturing is coming back a bit,” Swonk says. “We’re moving in the right direction, but it’s just not happening as quickly as it did in the past.”