Fed reports boost freight outlook

Fed reports boost freight outlook

The most recent economic indicators released by the U.S. government point to continuing momentum for trucking in the foreseeable future

The most recent economic indicators released by the U.S. government point to continuing momentum for trucking in the foreseeable future.

Industrial production grew 0.6% in March, according to the Federal Reserve. Inventories remained relatively lean throughout the supply chain in February, according to a Census Bureau report. Retail sales increased 0.6% in March and a healthy 0.4% excluding autos, according to another Census Bureau report.

Over the past year, manufacturers, wholesalers and retailers were scrambling to keep inventories consistent with that of retail sales, keeping freight volumes high. February was no exception, although there was a slight build-up in inventory. Sales declined 0.6% from January, but were 7.8% higher than February 2005. Inventories stayed about even with January levels, bringing the inventory-to-sales ratio to 1.26, up from January’s 1.25.

“Within the entire supply chain the inventories are lean at the manufacturing, wholesale and retail levels,” Chris Brady, president of Commercial Motor Vehicle Consulting told FleetOwner. “Once there’s a sale by any of those groups, the item will be reordered. What we’ll probably see is production actually growing at a faster rate than sales to build the inventories— they’re almost too lean.

“We’re at that stage where sales are expanding relatively well and you’ll see wholesalers and retailers build inventories,” Brady continued. “Production and linehaul freight volumes will grow faster than local and regional volumes.”

In a quarterly earnings report released today, Kirk Thompson, president & CEO of J.B. Hunt Transport Services Inc. said, “Fundamentally, we see little change in the major variables of our business: namely, a stable economy, continued growth in the demand for intermodal and dedicated value-added services, a serious driver shortage and a limited number of over-the-road trucks.”

Post-hurricane industrial production had been particularly strong compared with before last year’s string of deadly hurricanes, noted The Wall Street Journal. Production held a 5% annual rate in the two quarters following Hurricanes Katrina and Rita, and at a 1.5% rate for the prior two quarters, reported the newspaper. Factory output increased 0.5% in March.

“Generally the manufacturing sector is in pretty good shape since consumer and business spending is expanding,” Brady said.

Hide comments


  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.