Baird report details trucking’s “pricing dynamics”

According to the August Freight Flows report just issued by analysts at Robert W. Baird & Co., trucking’s “pricing dynamics” now differ markedly from previous cycles. “Based on the industry’s current capacity imbalance and our expectation for continued capacity exits through attrition, this cycle’s pricing dynamics differ from previous cycles,” the report’s authors stated

According to the August Freight Flows report just issued by analysts at Robert W. Baird & Co., trucking’s “pricing dynamics” now differ markedly from previous cycles. “Based on the industry’s current capacity imbalance and our expectation for continued capacity exits through attrition, this cycle’s pricing dynamics differ from previous cycles,” the report’s authors stated.

"Pricing improvements this cycle are supply driven, whereas during previous cycles the pricing growth was driven by strong demand," they continued.

While the volume growth rate is below the nearly 4% annual volume growth seen from 2002 to 2005, "even modest 2% freight growth can drive continued carrier pricing improvements during this upcoming cycle and support our constructive outlook on the transports [stocks],” the analysts explained.

In addition, according to Baird, “constructive” outlooks for the second half of 2010 among “transport companies and encouraging leading indicators suggest a return to more traditional peak seasonal activity.” The analysts noted that although volume growth rates will moderate in this year’s second half, “a return to more traditional seasonal freight patterns from June levels supports positive volumes and continued pricing improvement.”

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