The pricing market for dry vans is “ripe for recovery,” according to FTR Associates senior consultant Noël Perry.

“Flatbed has been a leader,” Perry said in today’s State of Freight webinar. “We expect a good year for flatbeds. The big question is with dry vans. Last year, dry vans were weak in their pricing. My opinion is they are ripe for recovery. From a change-in-pricing standpoint, dry vans are probably where the action is.”

Perry said the increase in order activity on the equipment side is not necessarily a precursor to a really strong year.

“Clearly the ordering people, management, are getting a little bit more optimistic,” he said. “However, I don’t read this as an opening of the floodgates. I think it’s going to take at least another six months of improved financials for managers to begin ordering like crazy.”

FTR president Eric Starks essentially agreed, saying he is reserving judgment.

“When you average what has happened the last three months, the numbers are pretty good,” Starks said. “But you would expect them to be this time of year, so I’m going to wait another month or two and reserve judgment. Order numbers in December and January were healthy, but that has not changed our general outlook of where we see behavior going.”

Perry said truck pricing has been down from where it was earlier in the upturn.

“So the big question is, have we established a new precedent to keep prices flat?” he said. “We’re convinced prices will go back up.”

Perry said he is “mildly optimistic” about GDP growth, but it is tracking at less than 3%, well below the rate of 3.9% in the 2004 recovery.

“There’s a pretty big issue about how the economy relates to transportation,” he said. “For trucking and intermodal, in good times—as in ’04—and particularly since ‘09, there was a multiplier effect on GDP. Since 2011, 2012, and 2013, the rail multiplier on GDP was negative because of the weakness of the coal and grain markets. We’ve had a pretty good recovery for both intermodal and for truck, and our outlook for the next three years is to have less of that positive multiplier. The economy is becoming more service intense and less manufacturing intense.

"Our freight growth forecast is lower this year than it was last year, which is a good thing for capacity but a bad thing for growth. Also, there is an upside opportunity if indeed these transportation bars resume their positive multipliers on GDP. As recently as 2013, there was a huge multiplier on truck and intermodal growth compared to GDP.

“The big issue in capacity is what’s happening with regulations. Additional driver hires are required by these issues. If FMCSA does what they say they’re going to do, we will have a spike in 2014, but then the issues come back again and stay very high. So this is pretty big deal.

“As the economy expands, the industry gets behind, so there is a drag on capacity. When the economy expanded very rapidly in ’04, the cyclical drag created a shortage of almost 200,000 drivers. The industry couldn’t keep up. On top of that were regulations. In this upturn, in 2011, 2012, and 2013, the effect was much less. It’s causing a drag of 100,000.

“The big change this time is that with Hours of Service and CSA, regulatory drag is becoming the big long-term issue. If FMCSA does what they say they will, it will throw this capacity issue to entirely new ground. In 2014, we will almost be back to the levels we were in ‘04 in terms of shortage.”