Truckload capacity is so tight that even a slowing economy is unlikely to dampen rate hikes this summer, according to investment research firm R.W. Baird.
In a July 1 research note, Baird's transportation analysts suggest enough freight is heading to the U.S. from overseas to keep a diminished truck fleet rolling and truck prices headed upward, even if economic growth begins to slow.
"Anecdotes from industry contacts suggest positive trends continued in June, although not as uniformly strong as May," said analyst Jon A. Langenfeld.
More than carrier and shipper anecdotes point to a slowing economy.
The JOC-ECRI Industrial Price Index dropped 12.2 percent from late April through mid-June before inching up 1.6 percent in the two weeks ending June 25.
The American Trucking Associations' Truck Tonnage Index and Morgan Stanley's Truckload Freight Index also show freight demand softening month-to-month.
But inventory levels are still low, Langenfeld said. And there are fewer trucks available. "Truck fleet age remains at a generational low with below-replacement level sales continuing near term," he said.
Although carriers from J.B. Hunt Transport Services and Stevens Transport to Con-way Freight are replacing older trucks with new equipment, boosting Class 8 orders, they're not rushing to expand their fleets to match higher freight demand.
Langenfeld cited lean inventories, sold-out intermodal capacity, rising domestic contractual rates and solid June international ocean demand as a "downside buffer" for freight trends "assuming slower GDP growth materializes."
"Despite a cautionary sign of potential freight moderation, supply-related capacity constraints should continue to support improved truck pricing," he said.
Ocean shipping executive Frank Baragona had more good news for domestic truckers Tuesday. The CMA CGM (Americas) president told The Journal of Commerce he believes imports from Asia will remain strong at least into the peak-shipping season, with volumes increasing in September and October.
Bookings and cargo projections for the next 60 days indicate there will be no drop-off in imports from Asia, said Baragona. That means more freight for truckers moving goods inland from U.S. ports and through retail distribution networks.
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