Loads up but pricing slows

The latest freight volumes report from American Trucking Assns. (ATA) showed a 2.9% seasonally-adjusted year-over-year (YoY) increase in loads for large (over $30 million in revenues) truckload carriers. That follows a 3.1% YoY increase in April.

“The data is consistent with our conversations with private fleets that suggested 2Q loads were up low single digits YoY,” said Peter Nesvold, an analyst with Jefferies & Co, in the firm’s Truckload Report.

According to Nesvold, flatbed loads saw the largest increase, 12.9% YoY, while dry van volumes decreased for the second consecutive month, falling 1.5% YoY in May.

Nesvold noted that checks with carriers by Jefferies indicate that June volumes remained “flat to down” and only increased in the final week of the month due to seasonal gains.

Despite increases in load volumes, truckload pricing slowed, rising just 1.4% YoY in May, net of fuel. It is the slowest growth since January 2010, Jefferies noted.

“We found this a bit confusing since the industry talks about how tight capacity is currently,” Nesvold said. “Inside the data, short-haul (less than 500 mi.) pricing turned negative for the first time in five months, dipping 1.0% YoY in May.”

Dry van pricing was up 2.0% YoY in May (vs. 2.5% YoY in April), Nesvold said, “whereas chemicals pricing decelerated sharply to 1.0% YoY (vs. 5.3% YoY in April). We believe the industry can hold low-single-digit price increases in 2012.”

Nesvold also suggested that the aging vehicle fleet is weighing down productivity and offsetting improvements in capacity vs. last year. Average miles per truck, he noted, dropped 5.5% from a year earlier following a 6.8% YoY drop in April.

Less-than-truckload tonnage grew 6.0% YoY in May, following a 5.6 increase in April. But, like the truckload numbers, LTL pricing fell 2.0% YoY after a 1.5% decline in April. It is the fifth YoY contraction in the past six months.

“Recent truck freight indicators are generally moving sideways, whether we look at tonnage, loads, or rates, and mirror softening data from other parts of our coverage (railcar orders, international airfreight tonnage, Asian parcel volumes, etc.),” Nesvold said. “Our channel checks are consistent with these data and suggest that TL volumes remained soft through June and trail YoY levels. Our checks also suggest that rates must firm before fleets resume their trade cycles en masse. With diesel consumption generally flat to down for most of 2Q, the demand environment does not seem to support a firming of rates for the time being.”

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