Execs Offer Mixed Assessment of Freight Market Since January

This story appears in the April 3 print edition of Transport Topics.

NASHVILLE, Tenn. — At the end of the first quarter, there are signs of optimism in the economy but also caution about the sustainability of the momentum, according to economic analysts and trucking executives at the 2017 Truckload Carriers Association conference.

On trucking conditions, flatbed carrier executives were the most optimistic of those attendees, dry van executives offered a mixed picture and most in the refrigerated community were disappointed in the current business environment, according to conversations Transport Topics had with more than a half-dozen truckload carriers over two days.

FTR Transportation Intelligence President Eric Starks told attendees that industrial production, core capital goods orders, housing starts and retail sales pointed to growth in recent months. Meanwhile, the business community is optimistic that the Trump administration will reduce regulations and lower corporate taxes.

“It looks like [the softness has] bottomed out. It started to pick up. Has it stalled though? Has it really turned the corner?” Starks asked. “It’s pretty clear that the bleeding has stopped for businesses. But the question is: Are businesses going to participate in this recovery or not? And that is an unknown.”

Joyce Brenny, president of Brenny Transportation Inc., told Transport Topics that flatbed activity has picked up in recent months. She believes it will lead to growth in the dry van and refrigerated markets. The St. Joseph, Minnesota, carrier has about 60 company trucks.

“Last year was a down year, but I’d say, within the last few months, we’ve been seeing better volumes and rates. The first quarter has been definitely better than the fourth quarter of last year and much better than the first quarter of last year,” she said. “We’re seeing more confidence because most of the product we haul is related to building and construction. It’s just renewed confidence, and [a recovery] has to start somewhere.”

FTR and Truckstop.com data show that flatbed spot load availability and rates have been higher than the prior year, and they’ve also bested the five-year average. Dry van spot load availability is up year-over-year and higher than the five-year average in 2017, but the rates remain relatively flat and are below the five-year average.

Interstate Distributor Co. CEO Marc Rogers told TT that while dry-van business headed in the right direction in the first quarter, he expected better results. Dry van accounts for about 75% of his business, and refrigerated makes up the remainder.

Rogers said January was a strong month but that February was weaker than expected and March was mixed.

“The first quarter was still soft but better than last year. So it was an improvement but not as much as I would have liked to have seen, as far as improvement in volumes,” Rogers said. “I’m slightly disappointed with the first quarter, but we’re optimistic about the second quarter because we started to see volume pick up a little at the end of March.”

In his opinion, dry van hasn’t experienced a robust year since 2007, despite good results in 2014 and 2015.

“As Americans, we expect the economy to grow over 3%, and as truckers, we need the [gross domestic product] to begin growing over 3%,” Rogers said.

Rich Karlgaard, columnist and publisher at Forbes magazine, agreed that GDP growth has been “substandard” in the past eight years. While some economic analysts consider 2% to 2.5% annualized growth as normal, he countered that 3% must be the benchmark. The Bureau of Economic Analysis reported March 30 that fourth-quarter GDP rose at a 2.1% annualized rate.

“How do we get back to 3% growth? According to Trump’s ‘Ross-Navarro’ economic plan, you concentrate on trade with more bilateral trade agreements, regulation needs to be radically reduced, and then you get to No. 3 taxes and No. 4 currency, whether you want a weak or strong dollar,” Karlgaard said, referring to the white paper written by Commerce Secretary Wilbur Ross and National Trade Council Director Peter Navarro.

The refrigerated segment certainly could use stronger growth in the economy, according to two trucking executives at the conference.

One of them, Classic Carriers President Jim Subler, identified overcapacity as a lingering problem in the first quarter that kept rates down. His Versailles, Ohio, refrigerated van carrier operates about 130 trucks that primarily serve the East Coast.

“Conditions are flat. We’re not busy, but we’re not starving. I had hoped we’d be a lot busier right now,” Subler said. “There aren’t any signs yet that things are getting better, other than economists telling us that the second half of 2017 will be better. But have I seen any evidence of it yet? Nope.”