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Logistics Execs Upbeat About Economy but Inflation Could Send Prices Up

The U.S. logistics and transportation industry is optimistic about the  economy and company prospects over the next three months, but inflation is a growing concern and prices are set to rise, according to a new survey by TCompanies.

The survey of 175 executives in the field, conducted in July, revealed that workforce shortages and regulatory issues are bigger obstacles to growth than trade tariffs. When asked their view of the U.S. economy over the next quarter, 74 percent said they were optimistic, 18 percent were neutral toward the prospects and 8 percent were pessimistic.

The executives’ optimism was backed up the August “U.S. Economic Forecast Flash” from Macroeconomic Advisers by IHS Markit, which said second quarter gross domestic product (GDP) growth was 0.7% below estimates at 4.1% in the Bureau of Economic Analysis advance estimate.

“But the composition of growth was more favorable to the near-term outlook than previously estimated,” the IHS Markit report said. In particular, real final sales grew at a 5.1% annual rate in the second quarter–the highest in about 12 years–and inventories declined by the largest amount in about eight years.

“This sets up inventory restocking as a likely contributor to GDP growth in the second half and beyond,” chief U.S. economist Joel Prakken and executive directors Patrick Newport and Ben Herzon wrote. “Furthermore, personal disposable income was revised sharply higher in recent quarters, while financial conditions remain supportive of growth despite escalating trade tensions between the United States and China.”

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In the survey comments on hiring plans in the coming quarter, 64 percent of respondents said they would hire more people, 30 percent expect to keep their workforce at same level and 7 percent said they would reduce their workforce.

On the outlook for company revenues in the next quarter, 75 percent said they expect revenues will increase, 19 percent believe they’ll stay the same and 6 percent think their revenues may decrease. As for company profitability, 67 percent of respondents forecast and increase, 25 percent see them staying the same and 7 percent expect them to decrease.

In the area of wage growth, 57 percent expect them to stay the same, 38 percent said they would increase and 4 percent said wages would be lower. With regard to the pricing for your goods or services over the next quarter, 58 percent of respondents said they would increase prices, 39 percent said they would stay the same and 3 percent said they would decrease prices.

When asked over the next quarter, what their largest obstacle to growth will be, 44 percent of respondents pointed to workforce shortages, 19 percent said regulatory issues would plague their business the most, 17 percent said trade tariffs and 5 percent noted the cost of wages.

But it’s the concerns about inflation that could impact the supply chain.

Amid inflationary pressure, 58 percent of respondents in the logistics and transportation sector said they plan to increase their prices in the next quarter.

“The survey numbers confirm what we have been feeling for some time in the logistics and transportation industry–overall, things are going very well,” Tom Burke, CEO of TCompanies, said. “And while there is a great amount of optimism, there are cautionary concerns with inflationary pressures as a majority plan to increase pricing and pass costs on to customers in the next three months.”