Better Days Ahead

A few stories in this edition of Transport Topics illustrate quite well the current state of the national economy.

As we report on Page One, total freight volume is rising. In December, American Trucking Associations reported last week, tonnage moved by the nation’s fleets rose 4.2% above the level of freight moved in December 2009.

More importantly, ATA reported that the freight index is now at 111.6, the highest point since September 2008, at the start of the recession.

Total tonnage is now about 13% higher than it was at its lowest point in this economic cycle, April 2009, when the ATA index fell to 99.2. On the index, 100 equals of the volume of freight in 2000.

At the same time, we also report this week that all of the public truckload fleets that issued their earnings summaries last week showed markedly improved results.

The improved earnings were led by Celadon Group Inc., which nearly tripled its per-share earnings in the last quarter, while Heartland Express reported a 44% gain in earnings and Werner Enterprises Inc. showed a 34% increase.

But the less rosy aspect of the earnings reports is that fleet executives said the improved profit picture resulted more from higher freight rates than from markedly increased freight volumes.

The recession has taken so much capacity out of the freight-delivery system that the modest economic recovery has allowed fleets to raise rates more than normal for the freight volumes they moved.

While improved financial results for fleets is always good news around here, it’s getting to be time for rising volumes to drive carriers’ fortunes, if the recession is to declared officially dead and recovery is to be celebrated.

Manufacturing and retailing are well into recovery mode, but the housing and construction sectors continue to lag. The automobile industry, another mainstay for truck freight, is slowly working its way back to normal volume levels but isn’t there yet.

ATA’s chief economist, Bob Costello, called the current freight market “choppy,” in that it’s “up one week and down the next.”

But Costello and many other economists and analysts continue to predict that business will strengthen as 2011 goes on, with the second half far outshining the first six months. And 2012 is stacking up to be a banner year, in most estimates.

So, in all, clearly things are improving, and still better days are coming.