Truck drivers see orders, miles fall in latest U.S. slowdown signal

Covenant Logistics

17/04/2019 06:00

By Stephanie Kelly and Jessica Resnick-Ault
    April 17 (Reuters) - At a truck stop in Ridgefield, New
Jersey, driver Paul Richards reviews a notebook where he tracks
miles driven and what he is hauling. His paycheck is down about
25 percent from the same period a year ago, and his weekly miles
have dropped as well.
    "This hasn't been a very good week," said Richards, who
carries building materials and recycled goods through the U.S.
Northeast. "Last week wasn't, either." 
    Across the United States, drivers, regional operators and
industry officials say the $700 billion U.S. trucking sector
slipped in late 2018, with the fall continuing into this year.  
  While the decline in freight rates and hauling does not
suggest the United States is headed into a recession, that
softness is consistent with slippage in the economy as a whole.
    The effects have been uneven nationwide, with weaker orders
and miles in the U.S. Midwest and Southeast than on the West
Coast, economists and regional officials said. 
    Trucking accounts for 70 percent of U.S. shipment tonnage,
and is key to supplying the manufacturing, construction and
retail sectors, all of which showed sluggishness in the first
quarter. The most common factors for the decline include the
U.S.-China trade war and weakness in the Farm Belt.  urn:newsml:reuters.com:*:nL1N20O1F7
    An ACT Research index of truck carrier volumes that surveys
about 60 fleets crossed into negative territory in November for
the first time since July 2016. It briefly returned to positive
territory in January but dipped again in February. It matches
forecasts for a soft first quarter for U.S. gross domestic
product, which is expected to come in at 1.8 percent growth,
according to Reuters polling. 
    "Clearly, the economy is slowing down," Kenny Vieth,
president of ACT Research, said in a recent interview. "When the
economy moderates, the trucking industry can be exceptionally
worse than the overall economy because of the deep cyclical
trend that characterizes the industry."
    To be sure, another indicator, the American Trucking
Associations tonnage index, is at a healthy level at 117.4,
still far above recession-era levels between 2008 and 2012, when
it remained below 90.
    (GRAPHIC: Truck tonnage and U.S. real GDP: https://tmsnrt.rs/2OjFgls)
 
    
    REGIONAL SOFTNESS    
    The industry's softness is not uniform nationwide. Reuters
spoke to 47 out of 50 state trucking associations, and of those
that responded, 16, including Illinois, Wisconsin, Ohio and
Tennessee, said activity had slowed. Another 16 said there was
little change, and the rest could not say one way or another.
    Shipments in the Midwestern and Southeastern United States
have been hit harder than other regions, according to Bobby
Holland, vice president and director of Minneapolis-based U.S.
Bank Freight Data Solutions. In the Midwest, export tariffs on
crops have hurt agricultural sales, and auto production is also
moderating, he said.
    Neal Kedzie, president of the Wisconsin Motor Carriers
Association, said activity started to slow at the end of 2018.
Brokers had been connecting trucking companies known as carriers
with requests from those who needed to haul freight. Now,
though, carriers are starting to reach out to brokers to find
loads. 
    "Carriers are having to do more searching on their own
versus the brokers, who (before) had so much to deliver that
they couldn't find enough trucks," Kedzie said. 
    Northeast shipments were strong last year, U.S. Bank said,
but state officials in Maine, Connecticut and Rhode Island all
told Reuters that early 2019 has been weaker.
    A year ago, Larry Hobson was driving 14 hours a day hauling
refrigerated food from Tennessee to New England. Now he is
working eight or nine hours a day, and his paycheck has dropped
by about $1,000 a week because of the decrease.
    "I am a lot less busy," he said at a service center in
Darien, Connecticut.
    
    (GRAPHIC: regional shipment growth: (https://tmsnrt.rs/2NRPt8O)
 
    
    PROFIT WARNINGS 
    Spot total rates for freight have slumped as well, averaging
$1.85 per mile in March, according to DAT Solutions, a freight
exchange company. That's the lowest seasonally since 2017.
    That weakness is starting to show up in company results. In
mid-March, Chattanooga, Tennessee-based Covenant Transportation
Group Inc  CVTI.O  warned of weak first-quarter results, saying
average freight revenue per tractor was down 5 percent in early
2019 from the year-ago period, with average miles down more than
11 percent.  urn:newsml:reuters.com:*:nL3N2163JO  urn:newsml:reuters.com:*:nGNX16T1Gq
    "The truckload freight environment has been weaker this year
from late January through mid-March," CEO David Parker said in a
statement last month. Covenant shares are down more than 20
percent in the last six months.
    Analysts have lowered quarterly per-share estimates for J.B.
Hunt Transport Services Inc  JBHT.O , Covenant and service
company Knight-Swift Transportation Holdings Inc  KNX.N  by 9
percent, 40 percent and 5 percent, respectively, according to
Refinitiv Eikon data.  urn:newsml:reuters.com:*:nFWN21J0P2
    "There's no doubt that we have been seeing a deceleration in
volumes," said Bob Costello, chief economist for the American
Trucking Associations (ATA). "This is an indication that the
economy is decelerating." 

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Graphic-Midwest, Southeast see shipment growth contract    https://tmsnrt.rs/2HP3V0Z
Graphic-Riding the ups and downs of the American economy    https://tmsnrt.rs/2WJtZOx
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 (Reporting by Stephanie Kelly and Jessica Resnick-Ault in New
York
Writing by Stephanie Kelly
Editing by David Gaffen and Matthew Lewis)
 ((Stephanie.Kelly@thomsonreuters.com
+1 646 223-4471
Reuters Messaging:
stephanie.kelly.thomsonreuters.com@reuters.net))