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After a tumultuous 2017, the New Year is shaping up to be an eventful and momentous year for Freight Transportation. These are a few of the trends to watch in 2018.

Trump Year 2 - the Sophomore Jinx and Crisis Management

America and the world have lived through year one of an American rookie politician and president. It was painful and disruptive with few solid accomplishments to point to. There is little consensus on the financial impact of the Tax Reform bill that was passed, Trump’s one big legislative achievement.

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Here is my annual report on the top stories in surface transportation in the United States and Canada over the past year. These stories are not listed in order of importance.

Economic Stability, Political Chaos, and Tightening Freight Capacity

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The previous blog looked at the potential Trump Effect (http://www.dantranscon.com/index.php/blog?view=entry&id=258 ) on Freight Transportation in 2017. This blog will focus on some of the other variables that are likely to shape the freight world in the coming year.

Upswing in Economic Growth

While 2016 was a soft year economically and in terms of freight and freight rate pricing, shippers, carriers, and economists are somewhat more optimistic about the New Year. Interest rates are likely to remain low (although there will likely be some increases in 2017). Household balance sheets are expected to remain in good shape. Employment levels in the U.S. are projected to remain strong. Investment in energy development is likely to increase. Inventory levels are predicted to decrease, driving an increase in manufacturing. Donald Trump has committed to increase the number of jobs in the United States in the coming year. The improving U.S. economy will likely help boost the Canadian economy as well.

Increase in Cost of Diesel Fuel

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This will likely be an eventful year in Freight Transportation. As I look ahead to the coming year, there will be two sets of forces at play. The President-Elect of the United States, Donald Trump, has made some bold promises. This blog will look at the potential impacts of his presidency. The next blog will examine some of the other major forces at play.

Infrastructure

Donald Trump has spoken repeatedly about improving America’s highways, bridges, and airports. The Transportation industry has bemoaned the lack of investment in infrastructure for several years. It is likely that at least some elements of whatever plan President Trump’s team puts forth will receive bi-partisan support from the other branches of government. 

It typically takes time to plan significant infrastructure projects so they reach “shovel ready” status. In addition to improving the nation’s infrastructure, these projects also create jobs, albeit over a specific timeline. Watch for some infrastructure projects to be launched in 2017 with the balance moving forward in the coming years. These projects should be a net positive for the transportation industry. However, keep in mind that some of these projects, such as toll roads, may receive some funding from private industry (if permitted by congress) and may result in higher costs for shippers and transport companies.

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Here are the top stories in freight transportation that caught my attention over the past year.

The Tepid Economy

The North American economies underperformed the global economy and the economies of emerging markets in 2016. Business investment, a key driver of the economy, was down in 2016, driven in large part by the big drop in fortunes of the oil and gas industry. Consumer spending and employment levels remained solid in the United States and somewhat less so in Canada. US manufacturing activity increased.

US imports began an uptick as did US imports of Canadian goods, driven in part by the strong US dollar and drop in the value of the Canadian dollar. Auto manufacturing remained strong in Canada but resource and activity in other sectors remained weak. The strong US dollar depressed export activity. Overall it was a sub-par year for the American and Canadian economies. As a result, demand for over the road truckload, intermodal and LTL service was soft in 2016.

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