Government report highlights economic importance of transportation

January 17, 2018

Tyson Fisher

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Truckers know that the trucking industry drives the economy, both literally and metaphorically. The Bureau of Transportation Statistics has quantified the transportation sector’s contribution to the economy with its recently released 2017 Transportation Economic Trends.

As the report points out, transportation “makes economic activity possible and serves as a major economic activity itself.” The report highlights important trends in transportation and the economy, and “explains related economic concepts and data sources for a general audience.”

Maybe a general audience with a passion for economics or who are gluttons for punishment.

With that said, below are some highlights most relevant to the trucking industry. For the full report, click here.

General economic contributions
The general theme when measuring economics over the past 10 years or more is data before the recession in 2008-09 and data after. The Great Recession disrupted trends, effectively erasing more than 10 years of economic progress in some cases.

For example, transportation-related final demand grew 3.5 percent from 1999 to 2007, when it peaked at nearly $1.4 billion. Transportation-related final demand is a measure of expenditures by households, private firms, and the government on final goods and services related to transportation. However, final demand plummeted 13 percent from 2007 to 2009. Final demand eventually recovered and surpassed the 2007 peak in 2014 and continued to grow.

Trucking ranked as the largest contributor to the national GDP in 2016 among the various transportation modes at $150.1 billion, followed by transport and support activities ($122.8 billion) and air ($105.4 billion). From 1997 to 2016, trucking’s contribution to GDP as a percentage decreased from 0.9 percent to 0.81 percent.

Transportation was the fourth largest expenditure category in 2016 at 8.7 percent, following housing (19.4 percent), healthcare (16.6 percent) and food (9.8 percent).

At the macro level, transportation surprisingly ranked only 13th among the 17 industries regarding its contribution to the GDP. However, the report emphasizes this ranking “understates the importance of transportation.” To start, the statistics only include for-hire transportation, omitting in-house transportation services. Second, every single industry uses the transportation infrastructure access to supplies/customers and to get employees to and from work. Essentially, the indirect contribution to GDP makes transportation significantly more important than the face value ranking suggests.

Which industry relies on transportation the most? According to the report, the wholesale and retail trade sector required 9 cents of transportation services to produce one dollar of output, using 4.7 cents of in-house transport and 4.4 cents of for-hire transport. Behind wholesale/retail was the utilities sector at a little more than 5 cents required per dollar of output.

From 2004 to 2016, businesses purchasing transportation services saw an overall increase in the relative prices for air, rail, truck, water and pipeline transportation services, including a decline during the recession. Costs faced to purchase truck, water, and air transportation services also increased, with trucking services growing at a slightly slower rate (27.4 percent) than water (29.9 percent) and air (33.9 percent) transportation services. General freight trucking (long distance) increased 30.6 percent and specialized freight trucking (long distance) went up nearly 19 percent.

Fuel prices
Fuel prices peaked in 2008, 2011 and 2014 as oil prices skyrocketed. By 2016, fuel prices reached low levels last seen in 2004.

It is worth noting that No. 2 diesel, railroad diesel and jet kerosene are about the same price and lower than regular gasoline before taxes. However, excise taxes send prices in various directions, resulting in larger differences at the retail level.

Transportation fuel sales prices rise

Employment
Within the transportation sector, truck transportation is the largest subsector, employing 29.2 percent of the nearly 5 million for-hire transportation employees in 2016. Truck transportation employment grew by 29.5 percent between 1990 and 2016, from 1.1 million to 1.5 million employees, with significant fluctuations related to major economic events such as Sept. 11, the Great Recession, and other economic recessions, according to the report.

The largest transportation-related occupation is heavy-duty truck drivers. In 2016, 1.7 million people worked as heavy-duty truck drivers. Four of the six largest transportation-related occupations involve driving, and account for 38.5 percent of total employment: heavy-duty truckers (1,704,520 employees), light-duty and delivery truck drivers (858,710), school bus drivers (515,020) and driver/sales workers (426,310).

From 2004 to 2017, compensation for workers in transportation and material moving occupations increased 46.6 percent from $19.74 to $28.93. In comparison, wages for all occupations increased 41.4 percent (from $24.95 to $35.28). The average compensation for transportation-related occupations is $6.35 per hour less than the average for all occupations. Median wage for heavy-duty truck drivers in 2016 was $41,340. The lowest paid drivers were ambulance drivers at $23,850, and the highest goes to airline pilots at $127,820.

Truck Transportation Employment chart

Government money
Where are all of those tax dollars going? Revenue collected and dedicated to transportation programs in 2014 totaled $355.7 billion. Of that revenue, more than half derived from taxes and charges on transportation-related activities. The other half came from not-transportation-related activities, such as sales and property taxes.

Highway and aviation accounted for 97.6 percent of federal transportation revenue in 2014. Nearly three-quarters of revenue was collected in highway revenues with approximately a quarter from aviation revenues.

Highway trust fund revenues have decreased by nearly 17 percent from 2007 to 2014. According to the report, this is because the federal government has not increased the federal taxes for gasoline and diesel since 1997. Increased fuel efficiency has also contributed to the revenue decrease.

State and local governments collected nearly 70 percent of all government transportation revenues. Approximately two-thirds of this revenue is collected from highway sources, including fuel taxes, motor vehicles taxes and tolls.

The burden of government spending on transportation lies heavily on the state and local governments. Federal spending was spent mostly on aviation (51.7 percent), followed by water (25.3 percent) and highways (9.7 percent). Approximately 70 percent of state and local transport spending went toward highways and 20 percent to transit.

Tyson Fisher joined Land Line Magazine in March 2014. An award-winning journalist and tireless researcher, his news reports, features and blogs bring depth to our editorial content, backed with solid detail. Tyson is a lifelong Kansas Citian.