Good day,
With earnings season pretty much over, and having listened to a bevy of calls, one theme was consistent: we’re not at a freight peak. On virtually every call, an analyst would ask the respective CEO whether we’re near the market peak and the answer would inevitably come back: no. “Nothing we’ve seen indicates that we’re near a peak,” or variations of that, were heard repeatedly. On Thursday, in its first earnings call since U.S. Xpress returned to the public equity markets, CEO Eric Fuller gave strong forecasts on the market, and all of them were noted to be based on the next six quarters. It’s significant to note then that the weekly spot rates posted by DAT have been trending down for several weeks. In the week ended July 28, DAT reported that spot van rates averaged $2.30 per mile, down from $2.45 in the week ended July 7. Flatbed was holding firmer at $2.78, down just four cents from the July 7 numbers, but reefer trucks were down to $2.62 from $2.77 in the first week of the month. These numbers are all still very high relative to a year ago, and on the calls, the CEOs noted that July is traditionally a soft month. Still, with everyone looking for a peak, these are numbers to watch.
Did you know?
New truck orders, which typically take a dip in the summer months as both carriers and OEMs reset for the fall, hit a new all-time high in July, according to the latest data from ACT Research. The firm said preliminary Class 8 net orders came in at 52,400 units in July, besting the previous record of 52,194 in March 2006, which occurred during a big pre-buy of trucks just before the 2007 EPA emissions standards.
Quotable:
“There’s a lot of people who lack career direction. Someone can start at $11.90 per hour as a dock employee and 6 months later, be fully trained earning $60,000 or more; and these jobs continue to be in demand.”
–Tamara Jalving, director of talent acquisition for Holland, discussing the company’s recent expansions to its Dock-to-Driver apprentice program.
In other news
China’s scrap policy shift is roiling markets
China was generally a buyer, but markets are being affected by a change in policy (WSJ)
Accounting pitfalls for trucking companies
Six things you should avoid in your accounting programs (Free Freight Board)
The people behind the wheel are changing
The New York Times looks at the changing faces of truck drivers (New York Times)
A turnaround in OPEC output
Despite problems in Venezuela and Nigeria, OPEC produced a lot more oil last month (Platts)
Peak season looking happier for carriers with transpacific rates set to rise
A week-ahead indicator is already showing higher numbers (The Loadstar)
Final Thoughts
One other observation from earnings week: everybody is doing great at retaining their drivers. Virtually every call featured a CEO saying they had put into place a series of retention tools and they were all working just great. Yet nobody sees the driver squeeze as having eased. This isn’t to say that the statements were not truthful. Maybe it’s just a reflection that the type of company big enough to be holding earnings calls with equity analysts has a lot more tools at its disposal to recruit and retain drivers. If that’s the case, it must mean the squeeze is falling on the type of companies you don’t hear a lot about. Maybe they’ve got 10 trucks, maybe less. But it is possible that based on the optimistic statements of the publicly-traded companies that the bigger guys aren’t bearing the brunt of the problem.
Hammer down everyone!
