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A rush of pre-Thanksgiving indices and data shows a mostly strong trucking market still in place

A slew of recent statistics and indices on the strength of the trucking market, released just prior to the Thanksgiving holiday.

–The ACT For-Hire Trucking Index rose in October, defying general market buzz that the market is softening. It rose to 55.6 on a seasonally adjusted basis, up from 50.1 in September. “The strong increase in the Volume Index and the downtick in the Capacity Index both pressed the balance higher, now showing some tightness returning to the trucking industry,” ACT said in its prepared statement. “This follows an essentially balanced market in September.” A year ago, the October ACT index was 75. Part of the strength could have come from pre-tariff shipping. In quoting Tim Denover, ACT Research’s vice president and senior analyst, the company noted that there were big increases in L.A./Long Beach container imports, “so it’s fair to say the pre-ship is helping and will likely reverse to temporarily loosen supply/demand in early 2019.

–The American Trucking Associations’ seasonally-adjusted For-Hire Truck Tonnage Index was up 6.3% in October, increasing to 119.9 from 112.8 in September. And like ACT noted, it may have been driven by a “beat the tariff” strategy. “”After slowing at the end of the third quarter, truck freight surged in October,” ATA Chief Economist Bob Costello said in a prepared statement. “(October) strength was due, at least in part, to strong import numbers, especially on the West Coast. This is likely a pull ahead of imports as shippers try to take delivery of goods before January 1,” when Chinese tariffs will increase. The seasonally adjusted index was up 9.5% from October 2017, and that was an increase from the 3.8% year-on-year increase for September. ATA said that for the year, tonnage is up 7.3% compared to last year.

–The Morgan Stanley truckload sentiment survey doesn’t have as firm an index number, but still had several notable features in the report released by the transportation research team headed by Ravi Shankar. First, there was some expression of an easing of the driver squeeze. “Shippers pointed out that spot rates are lower than contract rates and finding truck capacity isn’t very difficult though others also noted that the market is still strong,” the report said. “Also, the flatbed market is loose.” The report also had several random quotes from survey respondents, including this one: “Trucks are certainly more available now than they had been earlier in the year. Pricing is also starting to moderate, although still near double-digits higher than last year. Intermodal service in many lanes is the worst we have seen in years.” There also was a significant difference of opinion in what rates are going to do in the truckload sector. The average of the respondents said they expect truckload rates next year, excluding fuel, to be up 2.9% year-over-year. But about a third of the respondents said they expected increases of 4%-plus, and among that group, the average anticipated rate increase was a bit more than 7%. Sentiment for the current market strengthened on the demand side and on the rate side, with the supply side decreasing–which isn’t aligned with the statements that drivers are getting more plentiful–but the three-month forward sentiment was down across the board for truckload demand, supply and rates.

–Class 8 truck net orders in October were 43,256 units, according to ACT, down from the record-shattering 50k-plus numbers of July and August but still 21% better than in October 2017.  Steve Tam, also a vice president at ACT, said one notable statistic was that there were 10,850 cancellations from previous orders. But he also noted that “the more salient” number is that the number may appear high but was only 3.6% of the backlog that ACT has measured.

–Echoing the basic trend that J.D. Power saw in its statistics on used truck markets, ACT said the used class 8 market reversed course in October from what it said was a 10% decline in September volume. That number includes classes 3-8. The volume sold was up 10% from September. “Analysis of the individual market channels revealed that all three segments (auction, retail and wholesale) posted month-over-month gains, up 81%, 5%, and 2%, respectively,” Tam said. “Longer term, the retail and auction markets rose 21% and 3% on a year-over-year basis, with the wholesale market contracting 21% by comparison.”

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John Kingston

John has an almost 40-year career covering commodities, most of the time at S&P Global Platts. He created the Dated Brent benchmark, now the world’s most important crude oil marker. He was Director of Oil, Director of News, the editor in chief of Platts Oilgram News and the “talking head” for Platts on numerous media outlets, including CNBC, Fox Business and Canada’s BNN. He covered metals before joining Platts and then spent a year running Platts’ metals business as well. He was awarded the International Association of Energy Economics Award for Excellence in Written Journalism in 2015. In 2010, he won two Corporate Achievement Awards from McGraw-Hill, an extremely rare accomplishment, one for steering coverage of the BP Deepwater Horizon disaster and the other for the launch of a public affairs television show, Platts Energy Week.
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