Freight Recession?

July 4, 2007
The soft demand for freight services has three drivers, say analysts at Stifel Nicolaus: broad inventory correction following the second half 2006 inventory

The soft demand for freight services has three drivers, say analysts at Stifel Nicolaus: broad inventory correction following the second half 2006 inventory build up, slowing consumer demand, and continued weakness in housing and domestic automotive (with related slowing in support industries such as steel, forest products, etc.).

Capacity in the truckload sector was up slightly with more drivers available, says a recent report issued by Stifel Nicolaus. Less-than-truckload (LTL) capacity also rose slightly, as did rail capacity.
In the second half, things should not be as tough, say the analysts. Excess inventories appear to have been drawn down and higher rail rates are expected to drive more import traffic to truck-centric East Coast ports and transloading centers in the West. In addition, the industry will pass the one-year anniversary of the housing and automotive downturns, making comparisons easier.

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