Flatbed up 0.7% in February

There was very little change in our Flatbed outlook this month. Flatbed loadings continue to lead this trucking recovery and its status as the star of this recovery remains intact for 2012. Flatbed loadings were at 7.398 million in February, up 0.7% from a downwardly revised January. Year-over-year growth remains strong; however, growth fell below 5% (4.8%) after finally getting above that mark in January for the first time in 4 months. Flatbed and Bulk/Dump are currently the only trailer segments showing strong year-over-year growth. We still expect it to remain at or above the 5% mark for the duration of this recovery.

Recent history
Flatbed freight was the hardest hit sector during the Great Recession. As manufacturing and housing both toppled, flatbed loadings dropped 19.2% in 2009 alone. And this was on the heels of a 4.2% decline in 2008. Volumes dropped significantly from Q3 of 2008 through Q2 of 2009. Loadings were flat until the start of 2010 and then they rose strongly for the next four quarters. 2011 started off weak but loadings have been mostly rising since then. Year-over-year growth went near zero in October and November, but quickly got back near 5% at the end of 2011.

Outlook
After growth of 5.8% in 2010, loadings growth accelerated in 2011 to 7.1%. Growth will stay strong but ease slightly to 6.2% in 2012 and then accelerate to 7.6% in 2013 and 7.1% in 2014. Freight volumes are still below their pre-recession peak. However, the strong growth starting in 2010 and forecast through 2014 means that we are now likely to get to a new peak by late 2013.

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.

Analysis
Flatbed loadings growth has lead this trucking recovery even without normal auto and housing markets.  With the prospects improving for both of those sectors in 2012 we see strong upside potential for this segment. 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.

Flatbed loadings continue to lead truck segments in growth, but 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. Look for this segment to respond strongly to unexpected changes in economic results – up or down – particularly in the manufacturing segment.

NOTE:
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.