Fleet Management News & Business Info | Commercial Carrier Journal
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JOURNAL TRUCKGAUGE January freight: Trend or blip? The month was surprisingly good for trucking O ne of the common refrains in the latest Randall-Reilly MarketPulse survey of for-hire trucking executives was the improved business conditions in January – relatively speaking. Here's a sampling of the comments: • "January freight levels were fairly good. Much better for us than last two Januarys." • "January was a lot stronger than expected." • "Load count from our customers has improved from 4th quarter." • "Strongest January I've ever seen. It doesn't square with what is going on with the economy." • "The volumes this month have been unreal … hope it stays that way." • " Could be one of the best Januarys on record and not really sure why." These sentiments weren't universal, of course. But about 82 percent of executives said January was at least as good as December, and about half of those said it was better. (The MarketPulse report is available at www.ccjdigital.com/research.) Other indicators also showed a strong January. The American Trucking Associations' seasonally adjusted for-hire tonnage index was at its highest January level in five years. And the DAT North Analysts 60 believe that an unusually strong January in trucking 50 resulted from the replenishment of inventories that were depleted at the end of 40 2011 2012. BY AVERY VISE American Freight Index, which measures spot-market freight availability, jumped 42 percent from January 2012 and reached its highest level ever for the month of January. Good news is good news, but those skeptical trucking executives might very well have had something to worry about. "While I believe that the overall economy will be sluggish in the first quarter, trucking likely benefited in January from an inventory destocking that transpired late last year, thus boosting volumes more than normal early this year as businesses replenish those lean inventories," said ATA Chief Economist Bob Costello. Data from the Institute of Supply Management supports this view. ISM's inventories index – one of the components of the organization's closely watched PMI – shows that after inventory growth in August through October, inventories contracted sharply in November and December. Then in January, inventories jumped sharply. Government figures don't exactly reinforce ISM's data, but they don't really contradict it, either. According to preliminary estimates from the U.S. Census Bureau, inventories across the whole economy rose month to month in November and December, albeit just barely. ISM inventories index 2012 Index 50% marks the line between contraction and expansion 2013 But inventories at the wholesale level did decline – again by a small margin – in December, and it was just the third month-to-month decline in three years. Also, the inventories-to-sales ratio in December stood at 1.27 – a bit leaner than November. That's considerably leaner than the ratios from last summer, although it's not as lean as inventories in the second half of 2011 and the first quarter of 2012. So was January an outlier? Or will business continue to be good? Business rarely is that good in February and March anyway, but most of the economic indicators still look positive for the coming months. The housing recovery appears solid even with the large number of foreclosures still to work their way through the system. The latest manufacturing indicators, such as factory orders and ISM's new orders index, point to higher shipment activity – at least in the near term. And employment keeps growing. Watch politics and diesel prices. The government's continued failure to resolve the fights over taxes and spending continues to hold back business investment and consumer spending. And diesel prices could be in the early stages of a surge. Given the struggles of small carriers in particular in renewing their fleets, fastrising diesel prices could trigger failures. That would be bad news for those carriers, of course, but it would make the survivors healthier. AVERY VISE is executive director, trucking research and analysis for Randall-Reilly and senior editor, industry analysis for Commercial Carrier Journal. E-mail avise@truckgauge.com. Source: Institute of Supply Management 20 COMMERCIAL CARRIER JOURNAL CCJ0313_AVERY_Truckgauge.indd 20 | MARCH 2013 2/20/13 10:59 AM