The manufacturing sector—a key driver of the trucking industry-- saw decelerating growth in March, according to the Institute for Supply Management, a private research group.
Slowing deliveries and upward price pressure had moderated growth to a 55.2 showing in March, compared with 56.7 in February. Despite the mildly discouraging slowdown, there is no indication the manufacturing sector will see a reversal of its 34-month growth trend. Any reading above 50 indicates growth.
The ISM report indicated that new orders grew at a slower rate while order backlogs expanded at a faster rate. Supplier deliveries slowed at a faster rate. The encouraging news for carriers is that both manufacturer and customer inventories shrunk at a faster rate. With customer inventories being reported as low, this indicates that carriers will remain abuzz with activity as both customers and manufacturers seek to replenish inventories to normal levels.
But not all individual carriers are heralding great news for the first quarter.
Recently LTL giant YRC Worldwide scaled back its 1Q earnings guidance, as did refrigerated goods hauler Marten Transport. Meanwhile package delivery giant FedEx reported gangbuster fiscal quarter ended Feb. 28 earnings—35% above the same quarter last year.
These individual quarterly accounts mirror the hodgepodge of reports the American Trucking Assns. has been receiving from its members.
“Our membership is reporting mixed freight levels in March,” Bob Costello, ATA chief economist. “It’s all over the board. Certainly the first quarter doesn’t appear to be stellar.”
However, Costello added that the ISM report is positive for the trucking industry as it shows manufacturing grew. ATA’s February for-hire freight tonnage survey indicated a 2.5% drop in February. ATA has maintained its forecast calling for modest trucking growth in 2006 compared with 2005.
