Flatbed loadings drop in March

Flatbed loadings came in weak in March. Even with that, the growth rates in this market are well above industry averages. 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 7.285 million in March, down a sharp 1.7% from February. Year-over-year growth slowed considerably in March, up just 2.0%. However, Flatbed and Bulk/Dump were the only trailer segments to show positive year-over-year growth in March.

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 back to 4.9% in 2012 and then re-accelerate to 7.6% in 2013 and 7.2% 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
Although flatbed growth has slowed on the basis of very difficult 2011 comps, monthly growth is still expected to lead all truck types. Continued expansion of autos and housing provide an upside opportunity. 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 railroads have already been showing strong movements of forest and lumber products). The strong manufacturing and energy sectors have created strong opportunities, especially considering the amount that this fleet was downsized during the recession.

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.