Flatbed up modestly in December
January 27, 2012
Flatbed’s status as the star of this recovery remains intact for 2012. Flatbed loadings were at 7.510 million in December, a modest gain of 0.3% versus a downwardly revised November. Year-over-year growth remains very strong, at 8.5%, its best showing since the prior December. The growth rate remains significantly higher than any other segment. We still expect it to remain at or above the 5% mark for the duration of this recovery.
Once again there are no major changes to our outlook this month. Although flatbed loadings continue to lead truck segments in growth, the growth has slowed as steel and machinery shipments have slowed in the manufacturing sector. Flatbed has upside potential should the opening glimmers of improvement in the housing sector turn into a real trend. The recent improvement in lumber shipments and housing starts gives us hope of that. Look for this segment to respond strongly to unexpected changes in economic results – up or down – particularly in the manufacturing segment.
Flatbed freight was the hardest hit sector during the Great Recession. As manufacturing and housing both toppled, flatbed loadings dropped 24.2% in 2009 alone. And this was on the heels of a 4.2% decline in 2008. While many sectors saw a significant bump in volumes over the latter half of 2009, Flatbed loadings rose a much more modest amount. Because of this the year-over-year growth was much more substantial during 2010 and 2011 than some of the other sectors: consistently above 5% since the start of 2010.
Our recent freight update led to much stronger growth in 2010 than was originally anticipated – showing more than double the growth that we originally estimated (from 8.3% to 16.9%). Despite slowing dramatically in 2011, the annual growth of 5.5% is still well above the industry totals.
After a huge surge of 16.9% in 2010, loadings growth eased in 2011 but still showed strong gains. Those gains will continue with growth of 6.7% in 2012, 6.4% in 2013, and 6.1% in 2014. Freight volumes are still below their pre-recession peak. However, the bigger surge in freight during 2010 means that we are now likely to get to a new peak in 2013.
Good auto demand should bolster steel shipments and lumber should respond to the modest housing recovery. The strong manufacturing and energy sectors have created strong opportunities, especially considering the amount that this fleet was downsized during the recession. One note of concern is that changes in the economic climate are likely to impact this segment more than others. If the economy stalls then business investment would likely be heavily reduced. The strong manufacturing sector, and the business investment necessary for that, have driven much of the rebound in this sector. If that investment stalls, then this sector will likely be disproportionately affected. Conversely, if housing and construction improve quicker than anticipated it would have a very positive impact on flatbed demand.
U.S. Truck Loadings is the estimated number of truck loads originated in the United States plus truck loads that come to U.S. destinations from Mexico and Canada. It is tons divided by the average tons per truck. FTR’s data is seasonally adjusted and measures both short and long-haul OTR segments.
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