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Mixed economic signals means continued uncertainty for trucking

Earnings reports from major carriers and current analyses of U.S. economic activity are providing mixed signals as to whether a recovery is gaining steam

Earnings reports from major carriers and current analyses of U.S. economic activity are providing mixed signals as to whether a recovery is gaining steam.

According to Dow Jones & Co., its economic sentiment indicator (ESI) slipped to 38.3 in April from 39.4 in March, driven lower by mixed news about jobs, concern about the Greek economic crisis, and the Securities and Exchange Commission's lawsuit against Goldman Sachs, which has been accompanied by Congressional testimony focusing on the company's role in the financial crisis of 2007 and 2008

Even after excluding Goldman coverage, the ESI is quite modest, indicating a still lackluster U.S. jobs market, the firm reported, with the soft employment backdrop, in turn, continuing to dampen consumer sentiment in spite of other indicators pointing to upward momentum in the economy.

The weak April ESI comes as U.S. consumers' feelings about the economy remain mixed, if not contradictory. On the one hand, the Conference Board's Consumer Confidence Index registered its second monthly gain in April, rising to its highest level since September 2008. However, the University of Michigan/Reuters Consumer Sentiment Index, however, dropped in April to its lowest level since August 2009.

Trucking earnings remain mixed as well. Despite revenues climbing to $359.9 million in the first quarter this year from $339.7 million in the same periods last year, LTL operator Arkansas Best Corp. posted a net loss of $21.4 million compared to a net loss of $18.2 million in the first quarter of 2009.

"Despite some signs of improvement in our nation's economy resulting in the stabilization of our business, [our] first quarter results illustrate the ongoing effects of low freight levels combined with a weak pricing environment,” said Judy McReynolds, Arkansas Best’s president and CEO.

“[Though] encouraged by the first quarter increases in … tonnage versus very low totals last year, for operating results to improve in a meaningful way, we need further increases in freight demand, strong improvements in pricing and the positive financial impact of wage concessions,” she said.

Yet on the truckload side of the industry’s ledger, some say demand is picking up – with freight rates climbing as well.

“The operating environment grew increasingly positive during the first quarter 2010. We appear to be firmly in a recovering truckload freight market,” said Kevin Knight, chairman and CEO of TL carrier Knight Transportation in the company’s first quarter earnings statement.

The carrier said its total revenue increased 11.4% to $165.7 million in the first quarter this year versus the same period in 2009, with net income climbing 5.1% to $12.3 million.

“Evidence of the recovery includes our 3.8% improvement in average miles per tractor for the first quarter this year,” Knight said. “This improvement marks the second consecutive quarter with increased year over year average miles per tractor following the 2.1% increase in the fourth quarter of 2009. Market share growth continued in the first quarter as we hauled 10.8% more loads than the first quarter of 2009.”

TAGS: News
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