Broughton shows optimism for economic recovery at trucking symposium

Updated Jun 4, 2020
08.22.17.Roadcheck

While the second half of 2020 and the long-term impacts of the COVID-19 coronavirus pandemic are unknowns, one trucking economist is willing to predict the U.S. economy’s recovery will be more robust and occur more quickly than many might think.

“That’s not to say it’s going to be even,” said Donald Broughton, managing partner and principal, Broughton Capital, during his economic outlook session at CCJ‘s virtual symposium earlier this week. “Some companies will explode, Amazon for example, and other companies will become the buggy whip manufacturer. The overall [recovery] is going to be extraordinarily dynamic, and as it happens it will be companies that use technology to create solutions that win.”

Broughton is bullish on the economy for many reasons, including low interest rates, low inflation and a continued return to domestic manufacturing.

“Onshoring was already happening because technology eliminates labor,” he said. “As China was losing manufacturing jobs to Vietnam and Bangladesh that offer even lower labor rates, we were bringing manufacturing jobs back because we could replace those labor costs with technology and do it more efficiently.”

The trucking industry’s transition to electronic logging devices also will have a major impact on productivity and efficiency for carriers going forward.

“After the ELD learning curve, the industry actually increased capacity, not decreased capacity. It improved everyone’s utilization,” said Broughton. “As a result, that capacity was out there and demand was holding up,” he added, referring to 2019 and the beginning of 2020.

Broughton also noted shortening supply chains will create new freight opportunities in the freight market as consumers demand speed, predictability and reliability. The amount of the supply chain that is less than 50 or 100 miles is going to increase in volume even more.

“Last-mile fulfillment is going to explode at a rate that is only going to be held back or contained by infrastructure capacity in warehousing, trailers and small delivery trucks,” he said.

“Domestic ton miles will grow at an outsized pace for most modes,” he added. “Transportation companies that can rise to the challenge have the opportunity to not only grow their top line but improve their operating margins.”

Learn how to move your used trucks faster
With unsold used inventory depreciating at a rate of more than 2% monthly, efficient inventory turnover is a must for dealers. Download this eBook to access proven strategies for selling used trucks faster.
Download
Used Truck Guide Cover