“The improvement in our incremental demand readings is consistent with recent upbeat comments from truckload carriers and supports sentiment that the economy may be closing in on recovery,” said a Morgan Stanley report. At a minimum, the violent pace of destocking is slowing and demand for truckload service appears to be rising to meet underlying demand, observed William Greene and Adam Longson.
That said, “numerous headwinds remain” before pricing may begin to rise. First, the supply-demand balance remains far below historical norms, say the analysts. Second, consumer spending and truckload demand face pressure from higher personal savings rates and unemployment, rising inflation expectations, and higher commodity prices (both industrial commodities and fuel).
Saying that long-term recovery remains uncertain, the analysts concluded that an earlier, albeit milder, recovery might sustain some of the weaker carriers and allow more capacity to reenter the market, holding prices down longer.
The Morgan Stanley Truckload Freight Index is a broad-based measure of incremental truckload demand versus incremental truckload supply.
