The freight transportation industry will see a recovery next year, but it will be painfully slow and will generate only modest increases in freight rates, according to Wall Street analysts.
Jason H. Seidl, director at Dahlman Rose & Co., is looking for an economic recovery with a long ride on the bottom, what he called an elongated "U," with growth dragging until employment picks up and consumer confidence improves.
"The consumer has to come back," Seidl told the annual transportation conference sponsored by the Intermodal Association of North America, the National Industrial Transportation League and the Transportation Intermediaries Association in Anaheim, Calif.
There have been some positive developments of late in the ocean, rail, trucking and air freight industries.
"The level of freight is weak in absolute terms, but sequentially it is moving up month to month. We are actually getting a bit of a peak this year," said Thomas R. Wadewitz of J.P. Morgan.
However, retailers' inventories had gotten so low this year that they had no choice but to restock in time for the holiday shopping season. "Inventory destocking was (down) almost to a dangerous level," said John L. Barnes, managing director equity research-transportation at RBC Capital Markets. "That's where some of this was coming from. … This is a very mixed bag. Things can change daily."
As freight volume grows next year, there may be occasional bouts with tight capacity, but the analysts expect carriers to ramp up laid up capacity quickly.
"An uptick in volume will bring new capacity into the market," Barnes said.
No matter what the transportation mode, carriers in 2010 are expected to push for increases in freight rates, but success will be measured in incremental gains over 2009 rates.
"No one will be too aggressive on pricing," Seidl said.
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