Construction Comeback Boosts Flatbeds, Heavy Haulers

This story appears in the May 21 print edition of Transport Topics.

The reinvigorated U.S. construction sector, including home and commercial building, is driving stronger business volumes for flatbed and heavy haul carriers, according to several fleet officials.

“Overall, business is excellent,” said Richard Bailey, president of flatbed fleet Boyd Bros. Transportation Inc., Clayton, Ala., who said demand is so strong that the company is turning down several hundred loads a day.

“We’ve got more business than we have seen in several years,” Bailey told Transport Topics, with particular strength in building materials and garden products to home im-provement stores, and shingles for home repairs and new construction.

Gary Salisbury, CEO of Fikes Truck Line, Hope, Ark., agreed.

“We are as busy as we possibly can be,” said Salisbury, with freight levels 10% above last year. “Business hasn’t been this great in many, many years.”

Fikes is seeing strength in commercial property construction in major cities such as Dallas, Salisbury said, as well as lumber and roofing materials for both new construction and repairs.

Recent government and private sector reports demonstrate the improvement in a sector crippled by the recession.

The Commerce Department on May 16 said housing starts last month reached an annual rate of 717,000, 30% above that month of 2011 and 2.6% above March’s total. A May 1 Census Bureau report showed broad strength across construction sectors, with March activity reaching $808.1 billion.

Flatbed freight shipments rose 6.4% in March, the latest month available, according to American Trucking Associations data.

While the market is improving, Ken Simonson, chief economist for the Associated General Contractors, told TT on May 11 that the construction market “is still very fragile and the improvements are fragmentary.”

While multi-family housing and non-residential construction such as warehouses should improve 10% this year, 2012 construction activity remains one-third lower than the peak in 2006, Simonson said.

Demand to move construction equipment and other products also is rising.

“Overall, Combined is seeing faster growth than predicted,” said Michael Card, president of Combined Transport Inc., Central Point, Ore. He said business increased 10% so far this year, twice the expected pace. “A lot of the growth has been in heavy-haul because people are buying more ‘yellow iron’,” referring to construction equipment.

Card said that growth was being driven by companies that needed to replace worn-out equipment.

Combined’s business that hauls glass and other products such as solar panels also has been strong, because demand for energy-efficient homes is rising, Card said.

“In general, business has been very robust,” said Jim Wilkins, director of the flatbed/tanker division at Prime Inc., also citing strong construction equipment shipments as well as lumber, drywall and shingles.

Wilkins and a Northeast flatbed executive also said the normal volume spike in May from the home improvement sector hasn’t been as strong this year, probably because a mild winter allowed an earlier start for home projects.

“Because it was a mild winter, business was stronger than it was the previous year,” Rudy Hayes, president of flatbed hauler George Hildebrandt Inc., Hudson, N.Y., which serves home improvement retailers. “But in the last few weeks, it’s been up and down.”

Bailey and Salisbury said their companies’ growth is being constrained by driver availability.

Part of the issue, Salisbury said, is that owner-operators have been leaving the over-the-road business for trucking jobs in the natural gas exploration areas in Oklahoma and elsewhere. Salisbury said he hoped that with the recent dropoff in exploration activity that owner-operators would return to his company.

Dan Grundman, president, D&E Transport Inc., Clearwater, Minn., who also reported business was strong, said that he could use another 20 owner-operators to supplement the 175 company and contractor drivers he has now.

His company serves oil and gas exploration in North Dakota in addition to carrying steel and aluminum.

Elsewhere in the Midwest, Terry Netusil, controller at BTI Special Commodities Inc. in Des Moines, Iowa, has noticed an uptick in construction material shipments, particularly from a Texas shipper that supplies shingles and lumber.

“We haul quite a bit from this customer and it’s now about five to six loads a week,” she said.

More improvement in housing is likely, several sources reported.

“I believe the housing market will continue to get better,” Bob Costello, American Trucking Associations’ chief economist, told TT. “Obviously any improvements help the flatbed sector first and foremost. From there, there’s a trickle effect to the dry-van sector for household durables. The tank sector also benefits from increased demand for cement.”

In addition, the National Association of Home Builders/Wells Fargo index of builder confidence jumped to a five-year high last week and the National Association of Realtors said its housing index reached an all-time high in the first quarter. The realtors’ index is based on mortgage rates, household income and resale prices.

Staff Reporter Greg Johnson contributed to this report.