US Freight Activity Declines on Excess Capacity, Weak Exports, Fed Says
Freight activity and demand for transportation services declined from late August to early October, partly reflecting weak exports, excess capacity and lower shipments of energy-related products, according to a Federal Reserve report.
Transportation service firms cited slight declines in overall activity in the Cleveland, Richmond, Atlanta, Chicago and Dallas districts, while activity in the St. Louis district was characterized as mixed, the Fed said in its Beige Book report, released Oct. 19.
Transportation firms in the Kansas City district saw moderate growth in sales, and contacts in the Cleveland, Atlanta, and San Francisco districts reported increases in online retail or e-commerce related activity, according to the report.
The survey is based on reports gathered by regional Fed banks to give an anecdotal picture of the economy. The Fed releases its Beige Book report eight times a year. This report covered Aug. 29 through Oct. 7 and was prepared by the Federal Reserve Bank of Dallas.
Freight volume contracted on a year-over-year basis in the Cleveland area and remains at a low level.
“Our contacts attributed this situation to sluggish growth, especially in the industrial sector, and rapid changes in retail distribution. One contact noted that shipment counts industrywide were flat for the first eight months of 2016 except for select carriers who contract with large online retailers. In the latter case, volume is rising. We heard several reports about overcapacity in the system, and this overcapacity is forcing some haulers to lower shipping rates and to reduce capital budgets,” the report said about the Cleveland region.
Rail traffic was weak in reporting districts, and air cargo volumes fell according to the Atlanta district's report.
In the Atlanta area, logistics firms reported softness in the movement of some consumer goods; however, warehousing and trucking contacts cited growth in e-commerce activity.
“Total rail traffic weakened compared with year-ago levels, impacted mostly by lower shipments of agricultural and energy-related products. District ports, however, continued to see year-over-year increases in container volumes and cargo tonnage,” according to the report.
In the Richmond area, a transportation source reported that truck and railroad services experienced sluggishness due to excess capacity and the strong dollar.
Port traffic rose in the Richmond and Atlanta districts, and evacuations were underway as Hurricane Matthew approached, according to Richmond's report.
In the Houston district, transportation service firms continued to report weaker cargo volumes, although increases in grain volumes were a bright spot, the report said.
