Optimism Grows for 2011 as Freight Indexes Rise

This story appears in the Jan. 24 print edition of Transport Topics.

A combination of upbeat reports in three recent freight indexes and record-setting 2010 port freight volumes are signaling stronger business levels as 2011 unfolds.

The TransCore Freight Index, based on load availability, rose 55% in December from the year before, remaining at a monthly record for the sixth consecutive month.

The numbers confirm “the relatively high demand for freight transportation in the face of looming capacity shortages,” TransCore said in the report.

On a sequential basis, TransCore’s spot freight volume in December rose 0.2% from November, far better than the more than 15% decline between the same months from 2001 to 2009.

TransCore’s report last week reinforced the Jan. 11 Ceridian-UCLA Pulse of Commerce Index, or PCI, which rose 4.1% in December on a year-over-year basis. That index is based on millions of diesel purchases using Ceridian’s Comdata fuel card.

Earlier in the month, Cass Information Systems said its December shipment index, based on freight bills paid, primarily for truck shipments, finished 14.1% above December 2009.

Meanwhile, the Port of Los Angeles, the nation’s largest, reported a record level of container exports and 16% annual container shipment growth. The neighboring Port of Long Beach announced 25% volume growth above 2009 levels, the largest year-over-year increase in its history.

“The 2010 volume gains far surpass our initial estimates, and we’ve been able to facilitate some export opportunities in the past year through our TradeConnect initiative and increased networking with local business stakeholders,” said Geraldine Knatz, executive director of the Port of Los Angeles. “We want to continue that momentum.”

“The latest PCI data further evidence the positive economic sentiment felt since the start of the New Year,” said Ed Leamer, chief economist for the Ceridian-UCLA index.

Comdata purchases between Christmas and New Year’s exceeded the levels in that period of 2007, which was part of the highest fuel purchase since 1999, Ceridian reported.

“This is partly a consequence of Christmas and New Year falling on weekends but also likely reflects inventory replenishment driven by a combination of consumption and restocking as the country’s mood elevated regarding growth in 2011,” said Craig Manson, senior vice president at Ceridian.

Three reports from analysts underscored the other positive news.

Jon Langenfeld, an analyst for Robert W. Baird & Co., said in a Jan. 14 report that the “demand outlook for 2011 is positive, with industrial end-markets likely outperforming retail.”

Langenfeld also noted that December freight trends were in line with expectations because the firm’s freight index rose 5% from a year earlier.

Demand in January is consistent with seasonal trends but has been better than it was in recent years, Langenfeld said.

A Jan. 13 survey of carriers by UBS Investment Research said, “A positive response to our business conditions question confirms that the trucking environment remains stronger year-over-year.”

That survey found 84% of carriers expected they would obtain higher rates when bidding for contracts with shippers in the months ahead.

“Truckers enter this bid season not having to fight for loads, industry capacity has declined and rates are likely headed higher,” the UBS report said.

A Jan. 18 Dahlman Rose report said its quarterly shipper survey found that businesses expect to grow at a 7.7% annual rate in 2011, more than the 6.8% rate that was predicted in its prior survey.

More than half of the shippers said they were more confident in the economy’s direction today than they were three months earlier, Dahlman’s survey found.