Analyst Says Trucking Industry Firming Up, Raising Prices
NEW YORK—A KeyBanc analyst said Thursday demand in the trucking industry is improving as downsizing and the failures of smaller companies have paved the way for existing trucks to carry more freight.
KeyBanc Capital Markets Todd C. Fowler said earnings will possibly grow because of the current shift. Fowler added that demand now seems to be improving as well.
That's good news for the trucking industry and the overall economy, because when the trucking industry shows improving demand, it means more manufacturers are making goods and more retailers are ordering them. Trucks haul everything from small consumer goods like toys and handbags to the biggest industrial products like construction equipment.
Fowler said industry volumes are improving this quarter beyond his initial expectations, as more retailers stock store shelves on encouragement from a better-than-expected holiday season.
Aside from retail restocking, Fowler said truckers are seeing strength in shipments of basic materials like paper, chemicals and plastic as well as industrial goods.
Housing and automotive segments still remain generally weak, he said.
Adding to the spur in demand are reports of fleet downsizing, which is good news for remaining truckers because it reduces competition for freight.
Fowler said some of his contacts are reporting that truck supply could come into balance with demand as early as next quarter. Trucking demand hasn't outpaced supply in over three years, when the first signs of a recession surfaced.
TheTrucker.com
2/26/10
Budget Chairman: Tolling and Mileage Tax Still on Table
The chairman of the Senate Budget Committee says Congress should not rule out a mileage tax, tolling or public-private partnerships as funding options for transportation no matter how unpopular they may seem.
Chairman Kent Conrad, D-ND, raised the point during a hearing Wednesday, Feb. 24, on the subject of President Obama’s recent budget request for 2010-11. Conrad highlighted some of the options.
“And these include increasing the gas (fuel) tax; charging for each mile traveled; adding more tolls; continuing general fund transfers, which I strongly oppose; and identifying other funding sources,” Conrad said.
“Now let’s be frank, none of these are popular options. But we have to find a way to close this funding gap. We are going to have to start making tough choices.”
Conrad said it is critical that Congress pass a long-term surface transportation authorization bill as soon as possible.
U.S. Transportation Secretary Ray LaHood, who testified at the hearing, said the administration is not keen on raising fuel taxes. But it is keen on establishing a national infrastructure bank and capitalizing on the momentum of the American Recovery and Reinvestment Act.
“The president has said he doesn’t want to raise gas taxes. And in a very bad economy, it’s not the thing that we should be doing to people who are out of work and who can ill afford to buy a gallon of gasoline,” LaHood told the committee.
LaHood highlighted the $4 billion proposal for a national infrastructure bank to fund projects with national significance, and addressed the issue of tolling and public-private partnerships.
“Tolling is a way to pay for additional capacity where states want to do that, and we need to look at that,” he said. “You can raise a lot of money through the use of tolls. And we’ve talked about the idea of public-private partnerships, where roads are going to be built. There can be private dollars utilized.”
Mike Joyce, director of legislative affairs for the Owner-Operator Independent Drivers Association, said OOIDA is ready for a good debate on funding.
“They’re saying that everything is on the table right now as far as trying to fund transportation programs,” Joyce told Land Line Now on Sirius XM.
OOIDA leadership says now is the time to narrow down the list and decide what stays on the table and what comes off.
OOIDA is against the tolling of existing capacity, but not necessarily against tolls being used on new highways or lanes. Joyce said OOIDA remains strongly opposed to the sale or long-term lease of infrastructure to the private sector.
“PPPs are still out there, and we’re going to fight those and have active debates on them,” he said.
President Obama’s budget request will continue to be the subject of congressional hearings and debate. It calls for $77.6 billion for the U.S. Department of Transportation, an increase of $1.6 billion over 2010 levels.
It contains $500 million in seed money for a new Office of Livable Communities, which has highway groups, including OOIDA and the American Highway Users Alliance, questioning where the money is going to be spent.
The Association and the Alliance say highway money should stay with highways and not be diverted to non-highway uses.
Land Line Magazine
2/25/10
Truck Tonnage Shoots Up
Surge in January follows worst year for trucking volume since 1982Trucking is "clearly in a recovery mode," with the American Trucking Associations' truck tonnage index showing its strongest increase since January 2005 last month.
That's good news for an industry that saw tonnage levels drop 8.7 percent for the entire year—the largest drop in freight shipments hauled by truck since 1982.
ATA's advance seasonally adjusted For-Hire Truck Tonnage Index jumped 3.1 percent in January from December, following a revised 1.3 percent increase in that month.
The index reached 110.4, its highest level since September 2008.
Compared with January 2009, truck tonnage surged 5.7 percent, the best year-over-year result since January 2005 and the second consecutive increase, ATA said.
That supports anecdotal reports from carriers and shippers that capacity in some sectors of trucking is beginning to get tighter, which may put upward pressure on rates.
"While I don't expect tonnage to continue growing as robustly as it did in January, the industry is finally moving in the right direction," said ATA Chief Economist Bob Costello.
"Although there are still risks that could throw the rebound off track, the likelihood of that happening continues to diminish," Costello said.
Journal of Commerce Online
2/24/10
FMCSA Opens Driver Screening Website
The Federal Motor Carrier Safety Administration yesterday, Feb. 24, opened a website where carriers can register to access a safety database that will be set up for screening applicants for driving jobs.
Although data probably won’t be available for a couple of months, carriers and third-party driver service providers can register for the Pre-Employment Screening Program FMCSA is developing at www.psp.fmcsa.dot.gov/Pages/default.aspx.
The program will give carriers access to five years of an applicant's accident history and three years of inspection history, with the driver's permission. The data will come from the Motor Carrier Management Information System and include the same information used by agency staff and state police for enforcement. Drivers also will have access to the information, and can include the report as part of their application.
There is a $10 fee for each driver’s history a carrier requests. An annual subscription fee of $100 also will apply. Carriers with fewer than 100 power units will qualify for a discounted annual fee of $25 per year. Individuals will be able to request a personal driving history for $10. No subscription is necessary for individual drivers.
FMCSA says the system will adhere to all federal security and privacy requirements to ensure the privacy and security of drivers’ personal information.
eTrucker.com
2/25/10
U.S. Diesel Price Climbs 2.9 Cents, $2.861
The national average retail price of a gallon of diesel increased for the second consecutive week, this time climbing 2.9 cents to $2.861 for the week ending Monday, March 1. The price, which had fallen 12.2 cents in the five weeks prior to last week’s 7.6-cent climb, is 77.4 cents higher than the same week last year, according to the U.S. Department of Energy.
All regions tracked by DOE saw price increases. The biggest increase, 4.6 cents, was found in the Central Atlantic, where prices climbed to $3.013. The smallest increase, 0.7 cent, was found in New England, where prices climbed to $3.018, the nation’s most expensive diesel by region. The nation’s least expensive diesel by region, $2.819, was found on the Gulf Coast, where prices climbed 2.6 cents.
California, which DOE tracks separately for its weekly update, saw a price increase of 4.3 cents to $3.023; that price is 87.9 cents higher than the same week last year.
Commercial Carrier Journal
3/2/10
Dec. NAFTA Trade up 10.5 Percent From Previous Year
WASHINGTON—Trade using surface transportation between the United States and its North American Free Trade Agreement partners Canada and Mexico was 10.5 percent higher in December 2009 than in December 2008, with a value of $58.5 billion, according to the Bureau of Transportation Statistics of the U.S. Department of Transportation.
The increase was the first over the same month of the previous year since September 2008, but the value of trade in December still remained 4 percent below the value in December 2007. For the full year, however, NAFTA trade in 2009 was down 23.3 percent compared to 2008.
BTS, a part of the Research and Innovative Technology Administration, reported that the value of U.S. surface transportation trade with Canada and Mexico fell 0.8 percent in December 2009 from November 2009. Month-to-month changes can be affected by seasonal variations and other factors, BTS noted.
Surface transportation consists largely of freight movements by truck, rail, and pipeline. About 85 percent of U.S. trade by value with Canada and Mexico moves by land modes.
The value of U.S. surface transportation trade with Canada and Mexico in December was up 12.3 percent compared to December 2004, and up 36.6 percent compared to November 1999, a period of 10 years. Imports in December were up 37 percent compared to December 1999, while exports were up 36.2 percent.
U.S.–Canada surface transportation trade totaled $35.4 billion in December, up 7.8 percent compared to December 2008. The value of imports carried by truck was 2.3 percent lower in December 2009 compared to December 2008, while the value of exports carried by truck increased 11.2 percent during this period.
Michigan led all states in surface trade with Canada in December with $4.7 billion.
U.S.–Mexico surface transportation trade totaled $23 billion in December, up 15.0 percent compared to December 2008. The value of imports carried by truck was 15.5 percent higher in December 2009 than December 2008 while the value of exports carried by truck was 10.4 percent higher.
Texas led all states in surface trade with Mexico in December with $7.9 billion.
The TransBorder Freight Data are a unique subset of official U.S. foreign trade statistics released by the U.S. Census Bureau. December TransBorder numbers include data received by BTS as of Feb. 16.
BTS will release a summary of annual TransBorder data on March 18 and January TransBorder numbers on March 30.
TheTrucker.com
3/3/10
Manufacturing Index Hits Six Year High
PMI of 58.4 shows acceleration in sixth month of growthManufacturing business increased in January for the sixth consecutive month after 13 months of decline, according to a survey of the nation’s supply executives by the Institute for Supply Management.
The PMI index of economic activity hit 58.4 percent, its highest level since August 2004, when it reached 58.5 percent. Growth in January accelerated as the index jumped 3.5 percentage points compared to December's seasonally adjusted reading of 54.9 percent.
New orders, production and employment grew in January. Supplier deliveries were slower. Inventories have been contracting for 45 months in a row, since April 2006. But the contraction slowed somewhat in January as the inventories index moved up 3.5 percentage points to 46.5 percent.
A PMI reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting. A PMI in excess of 42 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, this month’s reading corresponds to a 5.5 percent increase in GDP and the ninth consecutive month of growth in the overall economy.
“This month's report provides significant assurance that the manufacturing sector is in recovery. Both the New Orders and Production Indexes are above 60 percent, indicating strong current and future performance for manufacturing. This month, 13 of 18 industries reported growth, up from nine industries last month, and this is a good indication that the impact of the recovery is expanding,” said Norbert J. Ore, chair of the ISM business survey committee.
Journal of Commerce Online
3/1/10