There remains plenty of industrial activity to support continued strength for the general economy and freight demand in particular, says Jonathan Starks of FTR, in the firm’s August market analysis.
Overall, industrial activity has picked up this year following a stretch of weakness that lasted from mid-2015 until late 2016. In segments important to trucking, Starks identifies mining as a specific strength, with stone/earth, meta, coal and oil/gas leading the way.
Here, though, there is a mixed bag of news. Oil and gas shale fields has shown growth while construction (especially housing) remains “lackluster.” Metal demand has rebounded, he said, but remains weak overall and coal, after picking up late in 2016, hasn’t grown much.
Durable goods noticeably slowed during the second quarter and automotive is also trailing previous recovery averages.
While we did eek out a gain in Q2 you can easily see that we are running well below the recovery average and we i a very negative quarter in Q1,” he says. “Automotive demand looks to have topped out and growth in industrial activity or freight demand is not likely to come from this segment.”
Non-durable goods saw a notable uptick in the second quarter.
“While some industrial activity has shown recent improvement, it is nowhere near the big gains in demand and pricing that we have seen from the spot market over the last year,” Starks notes. “Contract markets, however, are adjusting more slowly. Can we keep the growth going if the industrial sector doesn’t show further improvement?
“One noteworthy item has been the sustained power of this recovery,” he adds. “It has not been overly strong, but it has been historically long. The good news is that there is nothing currently happening that would indicate a serious threat to the continuation of a 2%+ economy. That should give us a reprieve from recession talk for at least another year.”
Did you know?
Prior to Hurricane Harvey, the port of Houston had seen container imports rise 22% year-over-year through July. It could be days if not weeks before most cargo ships are again able to enter the port.
“We’re seeing the beginning of a massive impact on all trucking networks. It’s going to get ugly.”
– Jett McCandless, chief executive of Project44, the closure of the Port of Houston
In other news:
Shipping remains stalled in Houston
While rains may have gone and the Port of Houston is officially open, officials say it could be weeks before large cargo ships are able to safety navigate the Houston Ship Channel to reach the port. (Wall Street Journal)
Businesses race to understand blockchain
As the blockchain wave continues to roll across the globe, businesses are quickly embracing the technology behind it and its potential. (Supply Chain Brain)
U.S. GDP revised upward
The government has revised its second-quarter GDP rate, moving it to a seasonally and inflation-adjusted annual rate of 3%. (Wall Street Journal)
Driver pay inches up
The National Transportation Institute says that the National Driver Wage Index rose 0.9% in the second quarter year-over-year, but that larger increases are expected later this year. (Transport Topics)
“Two-sticking” in a B-61
For those old enough to remember, TruckersNews has posted a video of the “simple days of trucking,” back when driving a Mack B-61 with a two-stick was all a driver wanted. (TruckersNews)
Driver wages edged up in the second quarter, but the National Transportation Institute expects wages to rise even more as the industry gets closer to the ELD mandate and fleets try to retain drivers.
Hammer down everyone!