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September 2017
Garry Bartecki examines the industries current financial challenges and regulation changes.

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Economic forecast for 2012? Continued uncertainty

What's the economic forecast for 2012? Continued uncertainty, according to Keith Prather, managing director of Armada Corporate Intelligence and a respected transportation industry expert.

"2012 will kick off with inventory rebuilding activity if we don't get hit with an unexpected event, such as the tsunami and earthquake in Japan last March or recent floods in Thailand," says Prather. "Continued uncertainty seems to be dominating a lot of business decisions."

Inventory levels continue to hold at near 20-year lows, and Prather says companies have taken a conservative approach to business in the fourth quarter because of so many global economic uncertainties. But, this also creates an interesting amount of "pent up demand" for products which will eventually have to be filled.

"If we see any uptick in consumer spending this fall, the spring of 2012 will be headlined by aggressive inventory rebuilding action," he says. "That could have an interesting impact on the transportation industry, given the continued tight truck driver capacity situation."

Even if economic growth is stagnant at 1-1.5 percent in 2012, driver capacity issues will continue. Prather still encourages shippers to factor in an expected rise in fuel costs as we saw continued throughout 2011. Geopolitical uncertainties will keep companies off-balance - and the commodities markets will follow accordingly.

"There's also still about $2.0 trillion of corporate cash sitting around, not working," says Prather. "The U.S. debt situation, continuing uncertainty in Europe, and geopolitical situation in the Middle East will push headlines and keep a hat on rapid economic growth."

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