The shipping industry is set to enjoy stable growth over the next decade, though legislative measures may affect the direction of this expansion.
The Freight Transportation Forecast 2017 to 2028 was released over the summer. Assembled with data from both the American Trucking Associations (ATA) and IHS Global Insight, the report paints a rosy picture of the industry’s future.
Overall freight volumes are projected to grow by 3.4% this year, which will continue annually through 2023. At that point, experts say the growth will slow, but still carry on at a healthy 2.3% through 2028. As a result, shipping tonnage on aggregate will increase by 36.6% from 15.18 billion tons this year to 20.73 billion tons in 2028.
Based on its predictions of 2.6% U.S. GDP growth this year, 2.2% from 2019 through 2023, and 1.9% between 2024 and 2028, the report predicts that total revenues in the freight transportation industry will increase by nearly 90% over the course of the next decade. Fluctuations in government spending on public infrastructure and new or revised industry regulations could alter these forecasts substantially, but before diving into such considerations, let’s look at some of the more notable mode-specific figures delivered by the ATA/IHS report.
Growth Predicted for Every Mode of Freight Transportation
Thanks to the ongoing expansion of the domestic energy industry, pipeline transportation will likely enjoy the greatest growth of any transportation mode in the coming years. Though not always considered a “traditional” mode of transportation, ATA Chief Economist Bob Costello asserts that “it absolutely is, because if it doesn’t go in a pipeline it’s going to go in another mode, whether that’s trucking or rail.”
According to the report, 207% growth in pipeline transportation over the next decade will increase its share of total shipping tonnage from 10.3% this year to 17.5% in 2028. Revenues in the pipeline sector should grow by more than 10% per year during this interval and surpass $163.4 billion by 2028.
In contrast, rail freight’s share of total tonnage will decline from 11.4% this year to 8.9% in 2028. That being said, rail carload traffic is likely to grow by just over 0.6% annually through 2028, and rail carload revenues are predicted to rise from $60.8 billion this year to $82.5 billion in 2028. Costello points out that these seemingly counterintuitive findings are easily explained by the fact that “pipeline is expected to grow so much over the forecast period.”
Both air freight and ocean freight should enjoy steady growth in the coming years, as well. The report predicts that air cargo tonnage will rise by 2.2% annually through 2028, while the overall volume of waterborne commerce will increase by 1.2% annually from 2017 through 2023 and 0.7% annually in the ensuing five years.
Despite this remarkable growth in most shipping modes, trucking should remain dominant for the foreseeable future, moving 10.73 billion tons of freight last year alone. While its share of overall freight tonnage decreased slightly from 70.6% in 2017 to 67.2% in 2028 — again largely due to the massive growth in pipeline transportation, as well the continued rise of intermodal transportation — the trucking sector is set to surpass $1.25 trillion in revenues by 2028, a significant increase over the current $719 billion mark.
Changes on the Horizon
The report does suggest that the impending federal electronic logging device (ELD) mandate may put a dent in the trucking sector. At the end of 2015, the U.S. Department of Transportation amended the Federal Motor Carrier Safety Regulations in order to require almost all commercial truck drivers who currently maintain records of duty status (RODS) to use ELDs.
In effect as of this past December, the mandate is intended to transform — and, largely, simplify — the trucking industry’s handling of issues like driver compliance.
Shortly before the ELD mandate was adopted, Congress passed the Fixing America’s Surface Transportation (FAST) Act, which the Department of Transportation calls “the first federal law in over a decade to provide long-term funding certainty for surface transportation infrastructure planning and investment.”
The FAST Act appropriates nearly $11 billion for freight-related endeavors, and states had until December 2 of last year to submit “freight plans” outlining how they will spend their share of the funding. Depending on how states choose to allocate this money, different freight transportation sectors may get a boost to their future prospects.
Foolproof Preparation for the Future
Regardless of the changes caused by recent regulations, companies looking to ensure that timely and cost-effective delivery of their shipments price must continue to look for reliable shipping and logistics partners like Primary Freight.
At Primary Freight, we have nearly two decades of experience with LCL and FCL ocean and air freight services to and from the United States. We supplement our international freight services with domestic, intermodal, warehousing, and on-forwarding services, and are able to help any company transport its goods as efficiently and effectively as possible.
If you’d like to learn more about Primary Freight’s award-winning shipping and logistics services, give us a call at (800) 635-0013 today.