Cautioning Impact of US Manufacturing Boom on Trucking

Increased Manufacturing Construction Spending

Jason Miller, a supply chain professor, discusses the recent increase in construction spending on manufacturing plants in the US. He points out that spending on new plants for Computer & Electronic Product Manufacturing and Electrical Equipment, Appliance, & Component Manufacturing has risen dramatically from an annualized average of $8.7 billion in 2019-2020 to $96.8 billion in April 2023. However, this 10x increase may not translate directly into a proportional increase in trucking freight volumes.

Impact on Trucking Volumes

A significant portion of this spending increase is attributed to the construction of semiconductor plants, which do not generate substantial trucking freight volumes. Additionally, while electric vehicle (EV) battery plants, another substantial investment area, do generate trucking freight, it's predicted this might lead to a decrease in freight volumes from internal combustion engine (ICE) plants. Given the larger number of components and greater weight associated with ICEs, a transition to EV batteries might result in a net loss of trucking freight volumes in the long run.

Net Impact on Freight Volumes

Despite the rise in manufacturing plant construction in the US, the net impact on trucking freight volumes might be more limited than anticipated. The decrease in paper manufacturing and the transition from ICEs to EV batteries are likely to offset any volume gains from expanded chip production and EV battery plants.

Source: Jason Miller