Morgan Stanley reported in its latest proprietary Truckload Freight Index that volumes had improved but at a pace slower than the normal seasonality.
”On a seasonally-adjusted basis, our index has failed to show any improvement over the last 5-6 weeks,” said Morgan Stanley's Adam Longson and William Greene.
The analysts noted that while demand has improved as the US economy stabilized and inventories have normalized, truckload capacity remains abundant.
Rates remain near the trough levels reached earlier this year, they continued, although year-on-year declines are moderating on easier comparisons. Refrigerated (reefer) pricing may still be eroding–a potential negative for carriers with greater exposure. Moreover, fourth-quarter demand may disappoint if retailers choose not to build inventories ahead of an uncertain holiday season.
Among positive signs highlighted by the analysts, at current levels, the Morgan Stanley index could show year-on-year improvement by mid-to-late October as carriers lap easier comparisons. The index also indicated a notable improvement in demand at the end of September. “It’s too early to tell if this is typical end-of-month shipping, which quickly subsides, or a sign of better times to come,” noted the analysts. “But the magnitude was greater than during recent months.” If retailers continue to drive down inventories, they said, any sudden uptick in retail demand could translate into a rapid increase in truckload services to avoid out-of-stocks.