Hints of Recovery Emerge

This story appears in the April 13 print edition of Transport Topics.

Initial signs of a pickup in trucking activity are starting to surface as the U.S. economy keeps stumbling along, according to interviews with several industry officials.

“The market has picked up a little bit, not a lot,” said Tom Kretsinger Jr., president of truckload carrier American Central Transport of Liberty, Mo. “It’s hard to get a read on that because it was the end of the quarter, and things tend to pick up then. Year-over-year business is still down. We are looking at this week-over-week,” he said.

“Still, it’s enough to make people feel a little more optimistic, but not too much,” Kretsinger added. “We are seeing a little bit of seasonal pickup; it isn’t one product or industry.”

His view was echoed by multiple sources.

“February was a bottom; March started to look a little better,” said Doug Clark, president of Greatwide Logistics’ freight brokerage. “It was encouraging to see the volumes trend higher. Not significantly higher, just higher.”

Greatwide’s brokered shipments for the week starting March 30 were 16% higher than the week before, and have grown 10% since mid-February.

Kretsinger said he also saw several encouraging signs within the overall economy, such as home sales picking up and stock prices rising to the highest levels in two months.

There are also signs that credit markets are loosening and demand could soon pick up, since wholesale inventories are declining. In addition, consumer confidence rose for the first time in three months from a historic low.

However, some are cautioning it is far too early to say either trucking or the economy are on the mend.

Many people “are desperate for any bit of good news,” said Bob Costello, American Trucking Associations chief economist. He said enthusiasm over a 1.8% rise in manufacturing orders wasn’t too significant, because that measure fell 18% year-to-year “The bottom certainly isn’t one month of data,” Costello said. “What we have to remember is that March in normal times is significantly better than February. If anecdotally we’re hearing it was a little bit better, it’s not that good.”

Russ Elliott, senior vice president of operations for Melton Truck Lines, Tulsa, Okla., told Transport Topics “I don’t know where the bottom is.”

“There is still too much truck capacity,” Elliott said. “We will have to see more freight demand, or more trucks must be taken off the road. Neither has happened yet. That will signal we are at the bottom.”

Several signs of weaknesses surfaced last week as well:

• YRC Worldwide, Overland Park, Kan., reported that volume fell more than 20% throughout the first quarter. CEO Bill Zollars told TT he has seen no significant signs of near-term improvement.

• Ryder System Inc., Miami, cut its earnings forecast in half, citing weakness in its largest leasing business.

• Trailer maker Wabash National Corp., Lafayette, Ind., put itself up for sale after posting a $111 million fourth-quarter loss.

Those developments were counterbalanced by recent sequential gains in three freight indicators.

“After several weeks of flat sequential readings that run counter to normal seasonality, our index is showing signs of some small sequential improvement,” said William Greene, a Morgan Stanley analyst, in an April 3 report about his weekly truckload freight index. “It’s hardly the type of improvement that gets us excited. The change is much smaller than normal seasonality would suggest.”

Spot market indicators also are looking better.

“We have seen a little pickup of demand,” said Joel McGinley, executive consultant for Internet Truck Stop. “There is a definite turning of the curve. It’s not substantial, like we would have hoped, but it is encouraging.”

The data service’s market demand index has improved to a reading of 2.38 from a low point of 1.47 in late January, McGinley said, though the index was at 11.15 in the first week of April 2008.

David Schrader, senior vice president for operations, Freight Business Services at TransCore, said load board postings rose 28% from February to March, below the expected improvement and 65% lower than March 2008.

Dan Van Alstine, senior vice president at Schneider National Inc., Green Bay, Wis., described a similar pattern of improvement from mid-February through late March, though he said the end-of-the-month volume was disappointing. Midwest markets are stronger than those on both coasts, he said.

Suppliers are noticing a small pickup, too.

“There is more [price] quoting activity. Anything is better than it has been. Compared to what we have seen over the past two or three months, it is encouraging,” said Paul Schlagenhauf, president of Badger Truck Centers in Milwaukee.

“We have seen a little higher order rate in March versus January and February,” Joe Plomin, vice president at ArvinMeritor, told TT. “We are more optimistic that we are seeing the bottom, and that gives us an opportunity to climb up,” he added.

Senior Reporter Sean McNally and Staff Reporter Frederick Kiel contributed to this report.