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Overdrive February 2019

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26 | Overdrive | February 2019 Despite rising concern about the U.S. economy's footing, the fundamentals for freight demand in 2019 remain mostly positive, said FTR analysts in early January. Speaking in a webinar, Avery Vise and Eric Starks said they expect freight movement to remain healthy in 2019, though the economy's growth will continue to slow from the surge seen in late 2017 and the first half of 2018. "We expect a growing transportation sector in 2019," said Vise. "Not explosive by any stretch. We will really just be moving back toward a normal market." Major freight-producing sectors such as manufacturing and construc- tion remain stable, as do broader economic indicators such as employ- ment and retail spending, they said. "We don't anticipate a significant pullback from 2018" freight demand, said Starks. "The key freight drivers remain fundamentally strong, even if growth does start to abate." The stock market's volatile swings in December and January made "peo- ple jumpy," said Starks, but "the stock market is not the economy." The freight market hasn't seen the stock market's volatility, Vise said, and instead has continued to grow steadily. "However, late in [the sec- ond quarter], we saw loadings flatten out," he said, which took pressure off capacity and could point to greater volatility in store for 2019. Truck orders fell sharply at the end of 2018 after setting records in the second and third quarters, though that's likely not a major cause for concern, says Vise. "The drop in truck orders says as much about the constraints of truck production as it does the freight market," he said. In addition to fleet confidence wan- ing slightly, truck makers are having a hard time keeping up with order demand, resulting in long lead times for delivery that likely are "discourag- ing truck orders," Vise says. Indices measuring the strength of the manufacturing and construction sectors remain positive, the pair said, though they're not as strong as in recent months. Likewise, indicators for retail spending, retail inventories, unemployment and energy pricing aren't as strong as they were, pointing to a moderation in the market but not a recession or downturn. — James Jaillet Freight outlook positive despite slowdown The somewhat dreary latter half of 2018 for many owner-operators led to the sounding of some optimistic notes in Overdrive's annual business- income expectations poll. At least one commenter was san- guine for reasons most don't share, given the electronic logging device mandate. Quipped "Mikey" under the poll: "Looking good for me — ELD-exempt and won't let FMCSA control me with an ankle monitor." This year's differential between those who predict better perfor- mance and those who anticipate worse falls in favor of the optimis- tic. Despite improving spot market rate performance in latter 2017, in last year's poll the pessimistic group was more sizable, probably due to worries over how the ELD mandate would affect productivity. Much of the change in responses this year reflects expectations of rela- tive income stability. Depending on your recent income, that could be good news — and you could well be correct. While late 2018 definitely presented a mixed bag for owner- operators depending on freight niche, economists see the probability of a full-blown economic downturn as generally unlikely this year. — Todd Dills Owner-operator outlook more optimistic this year Getting oil analysis is a great way to determine engine wear problems before they cause too much damage. It also can cut costs by giving you a precise reading on whether your oil has exhausted its lifespan and needs to be changed or whether miles of useful life remain. Partners in Business tip: Perform an oil analysis The Partners in Business program, produced by Overdrive and financial services provider ATBS, is sponsored by TBS Factoring Service. Owner-operators: How do you expect business income to trend in 2019? Better than 2018 31% Worse than 2018 23% About the same 23% Not sure 23%

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