The ATA’s reported 2% gain in volume followed a 2.9% decline in March figures. With February and March showing weakness, April was the strongest month since January for the industry.
The Association’s chief economist, Bob Costello says, “Many carriers noted an abnormally high start and stop trend in freight recently, with some good weeks followed by a step backward. Nevertheless, April was a good sign that truck volumes are improving from the challenging first quarter.”
In its proprietary truckload study, Morgan Stanley notes that its Index is consistently below year-ago levels and that anecdotally there has been a decline in truckload pricing for shippers. One reason suggested by the marketing firm is that carriers have been adding capacity in anticipation of the January 1, 2007 deadline when lower engine emission standards take effect.
With the June 1 deadline for beginning delivery of ultra-low-sulfur diesel (ULSD) fuel just passed, the Environmental Protection Agency is looking at October 15 as the cutoff for retail outlets to supply the fuel to the public.
While the ATA does understand the importance of ULSD in lower truck diesel emissions, the association’s president, Bill Graves, does note, “The industry remains concerned, however, that the transition could create fuel supply disruptions and operational challenges.” ATA is projecting an increase of $10.6 billion more than 2005 costs for truck fuel in 2006, for a total spend of $98.3 billion.
Worst-case fears are that there might be fuel supply and availability disruptions since ULSD could be contaminated in pipelines and at fuel terminals that also move high-sulfur fuels.