TL Grows While LTL Slows in ATA Report
It also depends on how large you are.
Data collected by the Economics & Statistical Analysis Department of American Trucking Associations indicates a “dichotomy” within the industry, according to ATA economist and statistics manager Bob Costello.
“On the one hand, truckload carriers as a whole continue to perform well; on the other, less-than-truckload carriers are starting to witness a slowdown in freight,” he said.
Over the last year, the truckload segment has experienced strong growth in volume and revenue, Mr. Costello noted. Loads were 10% higher in August 1998 than in August 1997, for instance. Revenue displayed a similar pattern.
The catalyst for truckload growth has been strong consumer spending, Mr. Costello said. Household spending rose at a 6.1% pace in the second quarter of 1998. It eased some in the third quarter but is still increasingly moderately, he said.
Not all truckload carriers, however, are enjoying the boom.
Small carriers (under $30 million in annual revenue) have not performed as well as large carriers, he said.
hile revenue growth for large truckload carriers is around 10%, small carriers are exhibiting a much weaker 1% to 2% rise, he pointed out.
According to the latest data, flatbed carriers are outperforming all other truckload segments. The reason for this is the strong construction industry. Housing starts grew at a 17.6% annual rate in the third quarter, propelling flatbed loads by nearly 15%, Mr. Costello said.
Dry van freight growth from one year earlier was nearly 5% in August but has been slowing since late spring, he said.
Bulk and tank carriers are growing nearly as fast as flatbed carriers. This segment has benefited from the troubled Union Pacific-Southern Pacific rail merger, Mr. Costello said.
Refrigerated carriers continue to report their usual cyclical freight pattern, he said.
For less-than-truckload carriers, freight has been slowing more rapidly, Mr. Costello said.
In fact, small (less than $300 million) LTL carriers’ revenue actually contracted in August compared with the same month a year ago. Large LTL carriers’ growth rates for revenue and tonnage were flat to declining slightly, he said.
Why the difference in performance between the trucking sectors?
“Is has to do with the makeup of the economy,” Mr. Costello said. “Strong consumer and construction spending has helped truckload carriers. Meanwhile, drops in domestic production, especially in the industrial sector, have hurt LTL carriers. Industrial production fell in the third quarter for the first time since the current seven-and- one-half year expansion started.”
Looking ahead, the analyst foresees low unemployment and rising incomes keeping households spending through the fall freight season. “What happens in early 1999 is the wildcard,” he said.
“It is likely that capital expenditures will slow for the rest of this year and into the next year as shippers experience a decline in business activity. Therefore, expect moderate growth, at best, for the LTL sector,” Mr. Costello said.
