John's Blog 10-5-11

Dear Friends,

Is there, finally, some realistic room for optimism? It’s starting to look that way, with a lot of different indicators trending upward. A very slight dip in durable goods sales was the only dark cloud in a clearing September sky. Year-over-year improvements indicate this isn’t just seasonal.

Last week we saw a couple of hopeful reports on consumer confidence. First it was the Conference Board reporting that consumer confidence edged up in September, with a monthly index reading of 45.4. This was up from August’s 44.5, a 2½-year low.

Then the Thompson Reuters/University of Michigan consumer sentiment index came out Friday with a September reading of 59.4. August came in at 55.7 so it was a nice bounce upwards. As a reminder as how far the nation’s consumer confidence has slid, this index averaged a reading of 89 for the five-year period ending in 2007.

The Census Bureau reported that retail sales increased 8.9% in the second quarter year over year. Profits increased 10.6% in the same measured period.

Then we come to durable goods. The Commerce Department reports orders fell 0.1% in August, after a 4.1% improvement in July. That slight drop, however, was driven by a more than 8% drop in auto and parts sales.

Still, while durable goods were slow, truck tonnage was up 5.2% in August year over year, according to the American Trucking Associations. This is the 21st straight month of year-over-year improvement. The July truck tonnage was better than initially reported, revised to 4.5%, so it looks like trucking is maintaining its momentum into the holiday season.

Carriers are seeing some relief in fuel prices but the real problem now is finding drivers.

Morgan Stanley released their truckload freight index indicating that freight has been trending higher over the last several weeks. The firm predicts a peak shipping period this year for the holidays, indicating a return to the traditional tight truck market in October. Despite all the bad press about the economy, it looks as if the dry truckload market is not affected.

Spot market rates are trending up in mid-September after two months of seasonal decline. As of September 15, van rates were already up 3.1% compared to August, reefer rates had rebounded 2.6%, and even flatbeds nudged up by 1.2% compared to the August average. Rates for both vans and reefers were higher in mid-September than they were in July as well, while flatbed rates returned to the July level of $1.74 per mile for line haul.

The rates on the chart below are national averages.

Source: TransCore's Truckload Rate Index - Spot Market Rates.

 

The American Association of Railroads weekly intermodal volume hit a four-year high in the 38th week of this year, ending September 24. The rails experienced a 3% weekly increase year over year, handling 248,402 containers and trailers. This is the highest level of traffic since the 39th week of 2007.

 

U.S. rails originated 305,133 carloads that week, for a 1.1% increase year over year.

 

At Wagner we are looking forward to a strong finish of the year as we enter the fourth quarter. We have several great opportunities and project plans in development.

 

From a transportation perspective we continue to see strong volume as we continue to upgrade our technology in this segment.

 

Should you have any supply chain needs we invite you to add Wagner’s muscle and brain power to your team. We are eager to grow through our clients’ success. Bring it!

 

Have a great day!

 

John Wagner Jr