While everal carriers announced positive second quarter financial results this week, analyst Jerry Leonard of Martin Labbe Associates said that for improvement to continue, the business sector would have to make capital expenses.
Carriers like USA Truck, CNF, Heartland Express and Boyd Brothers have seen an increase in revenue, net income and freight volume because manufacturers have ramped up production so spending by consumers is what has helped the carriers.
"The economy is reaching a new phase," Leonard told Fleet Owner. "Consumer spending will peter out for a while, so capital expenses in the business sector will help keep freight levels up. Consumers have a high debt level right now and that sector is not big enough to spark future growth."
"It will keep things on par but it won't dramatically drive the economy," Leonard said.
Which means, Leonard said, that carriers are going to have to continue cutting and containing costs, although there could be improvement in the business sector by year's end.
"We were seeing real improvements from the carriers, but now it has leveled off," Leonard said. "Towards the year's end things could improve, but it's still going to be a tough going."
Leonard added that less-that-truckload carriers can help themselves out by implementing rate increases, but believes truckload carriers will still struggle.
