Weakened Energy Sector Stalling Transportation Activity, Fed Says
Transportation activity was mixed in the United States early in the year as weakness in the energy sector limited gains, the Federal Reserve reported.
From early January to late February, economic activity expanded in most of the 12 Federal Reserve districts, the Fed said in its Beige Book report released March 2. The survey is based on reports gathered by regional Fed banks to give an anecdotal picture of the economy.
“The trucking industry reported plans to expand services in the St. Louis district. Several districts noted a decline in rail cargo, including Atlanta, Minneapolis, and Dallas, with Minneapolis attributing this decline to drops in oil and coal freight,” according to the report.
The Fed releases its Beige Book report eight times a year. This report covered Jan. 4 through Feb. 22 and was prepared by the Federal Reserve Bank of Kansas City.
Freight volume in Cleveland contracted due to the softness in the energy sector and manufacturing, but some contacts told the Fed “conditions are beginning to stabilize.” Some carriers saw a boost in volume related to consumer products, motor vehicles as well as building materials.
Despite the decline in freight volume, the region is optimistic about the future.
“The outlook by our contacts has improved since the previous cycle, and a majority of contacts now expect that business will expand in the upcoming months,” the Fed said about Cleveland.
In the Atlanta district, intermodal volume continues to expand but total carloads are down by double digits over the same time last year. Ports in the area reported to the Fed that container traffic and bulk volume increased.
Transportation was mixed in the St. Louis district, with some in trucking reporting plans to hire new drivers and expand service. In the Kansas City area, moderate declines continued in transportation activity, but firms said they expect activity to rise steadily in the months ahead, the Fed said.
In the Dallas area, transportation service firms reported cargo declines except for small parcels, which surged early in the year.
