Fleets See Slight Freight Gain
This story appears in the May 25 print edition of Transport Topics.
NEW YORK — A broad spectrum of truckers are reporting modest recent improvement in freight levels, but industry executives last week said it still was too early to declare a steady positive trend is emerging.
Using words such as “encouraged” and “a little better,” 12 truckload and less-than-truckload leaders said that volumes are better, particularly in the past two or three weeks. None of the executives who commented on market trends reported a business decline.
Comments from Con-way Inc., Celadon Group, U.S. Xpress Enterprises and others at the Wolfe Research Global Transportation Conference here came as leading U.S. economic indicators turned positive for the first time in seven months. Executives’ views also may signal market changes since the 4.6% February-to-March decline in American Trucking Associations tonnage index.
“We have seen nice sequential volume upticks in April and May,” John Labrie, president of Con-way Freight, said.
Con-way’s tonnage grew 5.7% from March to April, compared with 1.5% growth for those months on average over the past five years. On a year-to-year basis, April still trailed year-ago results by 9% compared with 13% in March.
On the truckload side, Stephen Russell, chief executive officer of Celadon Group, said, “The last couple of weeks have been better; whether that is related to the economy or restocking of inventory, time will tell.”
Russell said billed miles pulled even with 2008 last week (starting May 10) after trailing last year by 6.5% last month.
CRST’s CEO John Smith said volume has caught up with last year after trailing 2008 by 6% or 7%.
“What is one week?” he cautioned. “Let’s not get too excited.”
The companies that reported no measurable changes in overall business included: Landstar System, Universal Truckload Services, Roadlink and ABF Freight System.
“About this time last year, we said tonnage was rocking along the bottom,” said Robert Davidson, CEO of Arkansas Best Corp., which owns ABF. “Now it’s down another 15% or so. You would think we would lap ourselves with these numbers but there is always another shelf out there.”
“Volumes have been fairly stable for the last couple of months,” said Don Cochran, CEO of Universal Truckload. “The problem in the market in March was that most people expected a big uptick. Business will not stay at these levels all year.”
Landstar CEO Henry Gerkens chose a similar word — “stabilizing” — to describe April freight levels.
“Demand is getting a little better,” said Max Fuller, co-chairman of U.S. Xpress, adding that capacity has been booked for three weeks. Part of the reason, he said, was tight capacity in Texas, where some customers worried about a possible border closing because of swine flu in Mexico. Another possible reason, he said, was recent failures of regional truckload operators in that state.
Both Smith and Fuller also sounded cautionary notes.
“We in the industry are going to have a few more problems to shake off before we see profitability come back into this industry,” Fuller said, citing issues such as pricing.
Smith said it probably will be “another year and a half plus” before trucking fully recovers from the freight recession.
Freight volume “certainly is less worse, but it’s a little too early to call it a turn,” said Derek Leathers, chief operating officer of Werner Enterprises. “We’ve certainly started to feel an occasional ray of light. We don’t know how much of that is related to failures and capacity reduction.”
Chief Financial Officer Ginnie Henkels also used the phrase “less worse” to describe Swift Transportation Co.’s recent business, as did Greatwide Logistics’ CFO Steve Bishop.
On the LTL side, Tom Connery, COO of New England Motor Freight, said, “We have been in positive territory from the end of April to the first two weeks of May. There have been seasonal and market share gains. We are encouraged.”
At Pitt Ohio Express, counterpart Jim Fields said, “May is tracking a little bit better but it is not enough that we think there is an uptick in the economy.”
“We’re very hopeful,” said Paul Bergant, president of J.B. Hunt’s intermodal unit, adding that “over the last two or three weeks have seen somewhat of an improvement” at all company units.
Wes Frye, CFO of Old Dominion Freight Line, said, “We are seeing some sequential seasonal uptick” that is taking business closer to five-year average levels, though year-over-year tonnage still could fall 12% to 15%.
Five companies cited their publicly traded status as a reason not to comment on traffic trends. They were UPS Inc., Ryder System, C.H. Robinson Worldwide, Pacer International and Hub Group.
