Mixed outlook for freight

Freight volumes continue to be remarkably volatile, though experts contend the long-term outlook looks good for trucking. The American Trucking Assns. said truck tonnage decreased 9.5% in August after rising 5% in July. Year to date, however, truck tonnage is up 2.9% overall compared to the same time period in 2002. For Bob Costello, ATA's chief economist, that means the signs are good for trucking.

Freight volumes continue to be remarkably volatile, though experts contend the long-term outlook looks good for trucking.

The American Trucking Assns. said truck tonnage decreased 9.5% in August after rising 5% in July. Year to date, however, truck tonnage is up 2.9% overall compared to the same time period in 2002.

For Bob Costello, ATA's chief economist, that means the signs are good for trucking.

“High volatility in truck tonnage continued in August, but we had expected the number to be low due to manufacturing production falling in August, the blackout on the east coast, and the low level of retail sales,” he said.

According to the Commerce Dept., retail sales only rose 0.6% in August after climbing 1.3% in July.

“Despite the August figure, I still believe that truck tonnage is on a recovery path,” Costello added. “Between very lean inventories throughout the supply chain and improvement in new orders for manufactured goods, truck tonnage should continue to increase. That doesn't mean that we still won't have months like August, but the trend line will continue upwards.”

Satish Jindel, president of Pittsburgh-based SJ Consulting, told Fleet Owner that both truckload and LTL carriers are doing well in terms of freight demand and rate increases, though that’s largely because truck and trailer capacity is much tighter today.

“All across the board, the market is good for the transportation industry,” he said. “There’s robust volume on the truckload side and volumes are looking good on the LTL side. Rate increases are staying in place and they’ve not had to give them away with discounts.”

For example, Akron, OH-based LTL carrier Roadway said its Roadway Express subsidiary implemented a 5.9% general freight rate increase on non-contract freight effective July 13 and that during the third quarter, it increased yield per ton by 4.3% while increasing tonnage levels 6.4% above the same period last year.

Yet Jindel cautions that rising freight demand doesn’t indicate a “robust” economic recovery is underway. “Much of this is a function of available capacity, which has been reduced over the last few years,” he said. “From my perspective, these volume and rate increases don’t suggest a robust economic rebound is happening. The industry is doing well because it is more disciplined, reducing capacity and not adding more trucks despite increased volumes.”

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