Fleetowner 2126 Bluesky

Skies Clearing for Post-Holiday Tonnage Forecast

Nov. 12, 2004
Holiday freight forecast looking good

As trucks are rolling through the busiest season of the year, the pre-holiday indicators are pointing to a strong freight forecast through the beginning of ’05.

The Dept. of Commerce said today that seasonally adjusted retail sales and food service in October nudged up 0.2% to $342.1 billion.

Car sales have turned out to be the largest drag in October, as automobile sales and other vehicle dealer sales fell 2.5%. Auto sales have been volatile on a month-to-month basis, as motor vehicle and parts dealers posted a 4.2% leap in September. Excluding motor vehicle and parts sales, retail sales and food service grew a robust 0.9%.

Gasoline retailers appear to be reaping the benefits of record high crude prices as they posted the most robust revenue growth— 4.3% to $27.5 billion.

Rising energy prices didn’t appear to stop people from eating out more, as food services and drinking places posted a robust 1.0% sales increase to $33.1 billion. Consumers also appear to be gearing up for holiday spending as general merchandise stores raked in a 0.9% revenue boost to $42.7 billion.

Analyst Chris Brady, president of Commercial Motor Vehicle Consulting told Fleet Owner that increasing general merchandise sales in a month of record-high crude prices signals good news for the holidays. “It points out that even with high energy prices, household balance sheets remain strong for spending,” he said. “Jobs have been trending upward all year— it’s just not the strong growth typical in an economic recovery.”

Indeed, the latest numbers from the employment situation report released by the Bureau of Labor Statistics said that in October nonfarm payroll increased 337,000 in October. Despite the payroll boost, the unemployment rate ticked upward 0.1% to 5.5%.

Brady said the unemployment rate increase is actually a positive because the civilian labor force (the combined total of individuals with a job and seeking a job) increased 367,000. “This is a good sign because now people who weren’t looking for a job before because they thought the job market was down are now looking,” he explained.

The manufacturing and trade inventories and sales report for September released by the Dept. of Commerce today indicates that inventories are lean throughout the supply chain, noted Brady.

The combined value of distributive trade sales and manufacturers’ shipments increased 0.3% to $956.8 billion, while trade inventories were up 0.1% $1,258.3 billion. “The report gives an idea of what the conditions are like throughout the supply chain,” explained Brady, noting that the report indicates inventories are relatively lean at the manufacturer and retail level.

“The inventory-to-sales ratio for retail has decreased and as long as [inventories are] lean the chances of excess inventory at the end of 2004 are decreasing,” said Brady.

“The biggest risk is when retailers plan on certain sales volumes, and if consumer expenditures go below their plan they’re stuck with extra inventory at distribution centers,” he continued. “The worst case scenario is when inventories are excessive and retailers are not placing new orders to manufactures. As a result, there’d be no freight from manufacturers to distributors, which makes for weak freight tonnage.”

However based on recent indicators of retail sales growth and lower-than-normal inventory levels, the post-holiday picture is looking bright for carriers.

“These [manufacturing and retail sales] reports are very positive, not only for freight tonnage through the end of the year but for next year,” Brady said. But the holiday season isn’t over yet, and retailers are now anxiously waiting how it turns out. “[Based on Dept. of Commerce reports] we wont find out the results until February,” Brady said.

About the Author

Terrence Nguyen

Sponsored Recommendations

Reducing CSA Violations & Increasing Safety With Advanced Trailer Telematics

Keep the roads safer with advanced trailer telematics. In this whitepaper, see how you can gain insights that lead to increased safety and reduced roadside incidents—keeping drivers...

80% Fewer Towable Accidents - 10 Key Strategies

After installing grille guards on all of their Class 8 trucks, a major Midwest fleet reported they had reduced their number of towable accidents by 80% post installation – including...

Proactive Fleet Safety: A Guide to Improved Efficiency and Profitability

Each year, carriers lose around 32.6 billion vehicle hours as a result of weather-related congestion. Discover how to shift from reactive to proactive, improve efficiency, and...

Tackling the Tech Shortage: Lessons in Recruiting Talent and Reducing Turnover

Discover innovative strategies for recruiting and retaining tech talent in the trucking industry at our April 16th webinar, where experts will share insights on competitive pay...

Voice your opinion!

To join the conversation, and become an exclusive member of FleetOwner, create an account today!