Green shoots? Analyst sees “red roots”
Transportation analyst Ed Wolfe sees “a seeming disconnectbetween freight volumes during the March and April period and the reported improving economic data.”
“As opposed to green shoots we have seen what we have been referring to as red roots ' signs that freight volumes are actually worsening again,” said Wolfe, who formed his own firm, Wolfe Research last April, after a 10-year career at Bear, Stearns & Co. He holds his annual transportation conference next week in New York.
Wolfe pointed to several factors indicating weakening transport:
' Rail carloading volumes were down 22 percent compared to March and February volumes down 17 percent and 16 percent.
' The Cass Freight Shipment Index was down 25 percent in April compared to down 21 percent year over year.
' American Trucking Associations truck tonnage for the last month reported March was down significantly more year over year than the prior two months, since seemingly bottoming in December.
' Global Hong Kong air freight data worsened 23 percent year over year in April versus a 21 percent decline in March. Recently less-than-truckload providers Arkansas Best and YRC Worldwide both filed 10Q's stating April volumes finished the month worse than expected just a few weeks ago when they reported earnings in mid-April.
' Wolfe Research’s shippers survey conducted in Mid April reveals that despite reduced inventory levels, traffic managers are pushing out inventory restocking further than when polled three months ago.
“Over 70 percent of our shipper respondents don't expect to even begin restocking inventory before second half 2009, including 34 percent who don't expect to begin restocking inventory until 2010,” he said.
“Typically freight leads the economy and freight stocks lead the market. We have even seen certain economists list the big move in the transport stocks since March 9 as evidence of an impending economic rebound. Yet this seems a bit of a Catch-22 to us given how weak the freight trends remains,” Wolfe writes.
