Analysts Deliver Chilly Forecast

Refrigerated freight carriers got a frosty forecast about their segment of trucking from two analysts at a meeting conducted by a unit of the Truckload Carriers Association.

“Generally speaking, it costs nine to 11 cents a mile more to run in the refrigerated business than it does in the dry van business,” said Anthony Gallo, a trucking analyst with Deutsche Banc Alex. Brown in Baltimore. “But the rates don’t reflect that.”

Because shippers are under intense pressure to lower the delivered costs of their products, the reefer sector will continue to be in flux, he said.

Martin Labbe of Martin Labbe and Associates echoed a similar tone when the two men told participants of the difficult road ahead for their market at the annual meeting for TCA’s Refrigerated Division, which ran from July 14 to 16 in Vail, Colo. The messages were delivered before one of several “think-tank workshops” that replaced the traditional roundtable held during previous gatherings.

In the opening general session, Gallo set the stage by telling nearly 300 listeners that in an increasingly competitive segment, the old ways of doing business are unlikely to cut it. He predicted that shippers will continue consolidating the number of vendors they do business with.

Refrigerated trucking stocks have greatly under-performed the Russell 2000 small-cap index, Gallo said.

Labbe said he expected the pressure on the temperature-controlled industry get a lot worse, citing an increased shift by shippers to refrigerated carriers and heightened federal regulatory scrutiny.

For the full story, see the July 19 print edition of Transport Topics. Subscribe today.