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Most shippers expect a degree of normalisation this year, with stock levels stabilising, according to Morgan Stanley’s Freight Pulse for April.

Nearly 75% of shippers polled expect inventories to normalise, with nearly 50% predicting this in the second half.

Other numbers, however, are less encouraging. The American Trucking Association’s (ATA) monthly index fell 5.4% in March, the largest monthly drop since April 2020, at the start of the pandemic. The scope of the decline was sobering.

“Falling home construction, decreasing factory output and soft retail sales all hurt contract freight tonnage,” said ATA chief economist Bob Costello.

The authors of the TD Cowen/AFS Freight Index, a compilation of data from 3PL AFS Logistics and investment bank TD Cowen, predict further price drops in the truckload business in the second quarter, thanks to excess capacity and soft demand.

They noted that the spread between costs and miles per shipment had been narrowing since Q2 last year, which indicates that “carriers are using rates as a primary tool to gain volume”.

And they are not confident about a resurgence being on the horizon. Andy Dyer, president of transportation management at AFS, warned that demand for many goods, especially consumer durables, may not improve as interest rates and inflation continue to impact purchasing power.

The index shows a 13.1% year-on-year decline for truckload per mile rates for the second quarter.

Truckers have been visibly scrambling for business. Tender acceptance rates have climbed to levels of around 98%, a far cry from the situation a year ago. According to one recent report, the demise of tens of thousands of small truckers has not produced a drop in available capacity. With demand showing no signs of recovery, downward pressure on rates is more than likely to continue.

But JB Hunt executives are upbeat on the company’s longer-term outlook. CEO John Roberts said, during its earnings call this week, it was “not really a question of if the freight demand will come back to normal, it’s really a question of when?”.

Company president Shelley Simpson acknowledged, however: “We’re in a challenging freight environment where there is deflationary price pressure for an industry that continues to face inflationary cost pressures. Simply stated, we’re in a freight recession.”

However, she added that management remained committed to “disciplined investment” while “prudently managing costs”, essentially saying there would be no significant deviation from the set course.

One area where she sees potential for cost savings is a shift of over-the-road traffic to intermodal. This appears to strike a chord with shippers. The Morgan Stanley survey indicates that 43% of shippers are interested in a shift to intermodal transport, notwithstanding the poor service record of the rail industry.

Capacity should not be a problem. The latest report from the Association of American Railroads shows a 17% annual drop in intermodal trailers and containers in the week of 8 April.

While JB Hunt’s results did not look encouraging at first glance – operating revenues down 7%, truckload revenue retreating 10%, and operating income down 83% – Loadstar Premium, in fact, called the results “wonderful” and “incredibly reassuring”.

“Quarterly 2023 vs 2022 (or 2021) comparisons are a waste of time,” wrote Premium chief Alessandro Pasetti.

Noting the “beautifully run” company’s financial discipline, he said it had led to better free cash flow and balance sheet flexibility.

“And,” he added, “the firm is outstanding at managing expectations.”

But the fact that JB Hunt management expects further pressure goes against predictions that the trucking sector is about to rebound.

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