News / Clearer road or more bumps ahead for US trucking: depends who you ask

Depending on which guru you’re talking to, this is either the time to nail-down US trucking contracts, or wait for more advantageous deals a bit further down the road.

As the market continues to slow, experts are divided on whether a rebound is imminent.

Trucking market barometers for April make for dismal reading: the monthly For-Hire-Trucking Volume Index, published by ACT Research, dropped to a reading of 37.6, down from 44.6 in March; and the American Trucking Associations’ For-Hire Truck Tonnage Index slipped 1.7% from March, which was 3.4% down, year on year.

ACT Research noted that volumes, rates and capacity all continued to decline.

Trucker numbers have also been shrinking. In the first four months, over 31,000 trucking operating authorities were given up, of which nearly 25,000 involved single-truck operations, reflecting the toll the market downturn has taken on owner-operators.

The truckload sector experienced the worst devastation – according to SJ Consulting, truckloads in Q1 were down 6% year on year, with revenue per shipment down 5.7%. On the LTL side, loads dropped 9.1%, but pricing actually rose 2.7%, reflecting stronger pricing discipline in that market.

And last month, after a 14.5% drop in revenue in April, Old Dominion reported a decline of 14.4%. Its Q1 shipment count was down 10%, while tonnage retreated 12%.

This, said president and CEO Greg Gantt, was due to “continued softness in the domestic economy as well as a decrease in fuel surcharge revenue”.

He added: “While our volume decreased on a year-over-year basis, our LTL shipments per day remained relatively consistent with the first quarter and our yield continued to improve.”

Broader logistics indicators for May also show continuing headwinds. The Logistics Managers’ Index slid for a third consecutive month, to 47.3, its first reading in contraction territory since its inception over six years ago. Transport utilisation fell 9.5 points from April, to 45.5, while pricing declined 8.9 points – the sharpest rate of contraction in its history.

The report’s authors see little hope for recovery, unless the peak season can lift the industry’s fortunes.

“Without an influx of inventory for the holiday season, the freight market will continue to struggle,” they wrote. “Whether or not a new wave of inventory is coming is unclear.”

However, ACT Research analysts see light at the end of the tunnel – albeit a relatively faint glimmer.

Trucking VP Avery Vise said: “The data that drives our forecasting model still suggests that market conditions for trucking companies are at or near bottom, but the recovery looks fairly shallow – certainly compared to recent markets.”

Others noticed upticks in pricing towards the end of the month, feeding suggestions that now would be the time for shippers to lock low rates into long-term contracts – there are indications, though, that those rate improvements may be largely the result of the start of produce season.

Meanwhile, other observers think there is more grief ahead: transport rate benchmarking firm Breakthrough expects the trucking market to hit bottom in the third quarter, pointing to a slow housing market and high debt levels.

And hopes for a rebound in imports are rather dim at the moment. The US National Retail Federation estimates that containerised imports in May were 23% lower than a year earlier and projects imports to be down 15.3% in June, 8.9% in July and 10.5% in August. For September and October, however, it expects the decline to shrink to 4% and 2.7%, respectively.

The federation predicts a 7.9% decline in volume for Q3, which does not suggest a rebound that could lift the clouds over the trucking sector.