Refrigerated Fleets Stable as Other Sectors Struggle

This story appears in the May 4 print edition of Transport Topics.

The refrigerated sector of the trucking industry has been the only healthy activity for fleets in the current recession. Refrigerated truckload shipments grew slightly from last year, but dry vans, tankers and flatbeds all dropped substantially, industry executives and American Trucking Associations said.

“Food, the main freight in reefers, is relatively stable because it’s perishable or has a much shorter shelf life than other goods,” Chris Brady, president of truck company advisers Commercial Motor Vehicle Consulting, Manhasset, N.Y., told Transport Topics. “With stable sales, it’s easy for retailers to get their inventories in balance, which then needs continual replenishment by trucks, unlike clothes or electronics.”

ATA’s most recent seasonally adjusted Loads Index shows that refrigerated truckload shipments grew 1% in February compared with February 2008, but dry van shipments dropped 21%, flat-beds 23% and tankers by 15%. ATA does not report tonnage by sector.

The dry van, flatbed and tank truck sectors are tied closely to the consumer retail, construction and manufacturing sectors of the economy, which have been hit hardest by the economic recession.

“I’m just very glad that we’re involved in the refrigerated sector,” Mike Bunnell, executive vice president of sales for C.R. England Inc., Salt Lake City, told TT. “Our refrigerated sector is down 5% in this recession, the worst drop-off I’ve ever seen in any slowdown, but it’s still far better than anything else we carry.”

Bunnell said reefer freight constitutes 80% of all the over-the-road tonnage for the company’s divisions, and 65% to 70% of its tonnage overall. C.R. England ranks No. 1 on Transport Topics’ list of the largest for-hire refrigerated carriers in the United States and Canada.

“We have more problems dealing with the rate market than with volume in this sector,” Bunnell said.

“The main difference in this freight is that we’ve seen absolutely no drop-off in loads to national fast food restaurants but a noticeable fall in deliveries to higher priced restaurants,” he said.

Pat Leonard, director of operations of Prime Inc., Springfield, Mo., second on TT’s list of top refrigerated carriers, agreed.

“The information that has been distributed by ATA with regard to the economic sectors of trucking — refrigerated, dry van, tanker and flatbed — is something that we would concur with completely, agreeing that their information is correct,” Leonard told TT, “but we don’t have anything specific to add at this point.”

Prime also delivers dry van, tanker and flatbed loads and ranks No. 33 on the Transport Topics 100 list of the largest for-hire carriers in the United States and Canada. C.R. England ranks No. 36 on the list.

Publicly traded Marten Transport Ltd., No. 3 on TT’s refrigerated sector list, reported that its profit increased more than 52% in the first quarter of 2009 to $4.1 million, or 18 cents per diluted share, compared with $2.7 million, or 12 cents per diluted share, for the same quarter of 2008.

“Despite the overall turmoil in the economy and the exceptionally difficult freight environment, we continued to improve our profitability and our strong financial position in this year’s first quarter,” Randolph Marten, the company’s chairman and chief executive officer, said in the company’s report, issued in April.

Marten Transport “specializes in transporting and distributing food and other consumer packaged goods that require a temperature-controlled or insulated environment . . . in the United States, Canada and Mexico, concentrating on expedited movements for high-volume customers.”

“Consistent with the growth in our net income, another fundamental measurement of our profitability, our cash from operating activities increased to $27.4 million for the first quarter of 2009 from $14.7 million in the 2008 quarter,” Marten said.

Marten Transport, Mondovi, Wis., ranks No. 47 on TT’s for-hire list.

Eric Starks, president of the truck consulting firm FTR Associates, Nashville, Ind., agreed that the refrigerated sector was doing well but that, incongruously, the market for refrigerated vans was as depleted as any other sector of the trailer market.

“It makes you scratch your head,” Starks told TT.

“In general, the reefer market has been doing fairly well,” Starks said. “People have to eat, and its freight didn’t deteriorate, didn’t follow the general downward pattern of all other sectors.”

However, “the reefer market equipment has gotten hit pretty hard, just as well as the rest of market,” he said.

“Freight volumes would typically indicate that reefer fleets would be more willing to replace their equipment,” Starks said, “but so far, it hasn’t been the case.”