Less-than-truckload freight demand remains healthy despite fears of a return to economic recession, the head of Old Dominion Freight Line said Monday.
“Typically September is a peak month in terms of shipments and tonnage per day,” said David S. Congdon, president and CEO of the less-than-truckload carrier.
Although he couldn’t provide financial details before the company’s third quarter earnings release, Congdon said business was in line with predictions of slow growth. “We were seeing normal seasonal sequential trends from July to August and the beginning of September,” Congdon said. “The month ended on a good note for us.”
“If we don’t have a major calamity” like the 2008 financial collapse, “we’d expect a slow growing economy into the fall and into next year,” he said.
Some of the additional freight ODFL is gaining likely comes from competing carriers. The trucking company increased shipments 16.8 percent in the second quarter. “We’re still in a slow growth mode,” Congdon said, “but as far as we’re concerned, we’re clearly winning market share.” ODFL increased sales 19 percent in 2010.
Congdon is the latest trucking executive to note the split between Wall Street and trucking’s Main Street, where LTL and truckload freight volumes are improving. “A lot of what you see in the stock market, all the fluctuations, that’s driven by the headlines and not by the reality of what’s going on with tonnage,” he said.
The American Trucking Association’s for-hire tonnage index dropped only 0.2 percent in August from July, and grew a more solid 5.2 percent year-over-year. Truckload carriers and analysts is also say demand is rising or at least holding steady, with Morgan Stanley’s dry van truckload index climbing last month.
“This suggests that (the market) may be underestimating the potential strength of underlying freight demand,” the research firm said in a Sept. 26 note to investors.
Manufacturing is strengthening trucking’s muscle. About 40 to 45 percent of ODFL’s freight comes “straight from manufacturers,” Congdon said.
The Institute of Supply Management’s manufacturing index rose 1 percent in September, hitting its highest level since June after contracting in August.