Tuesday, November 09, 2010

Bad News For U.S. Truckers in November

Here's the ugliness in brief.

The Cass Freight Index fell 2.7% from September to October.  Truckers who raised their rates in October made dumb moves.

Wholesale inventories keep moving up.  Truckers, this trend is not your friend, because every parcel in inventory that goes unsold is something that doesn't need to be replenished.  No replenishment, no transport. 

The Ceridian-UCLA Pulse of Commerce Index (a mouthful) is down just a hair.  It measures truckers' purchases of diesel fuel, which is an odd way to estimate logistics activity since it doesn't account for tonnage.  Correct me if I'm wrong.  I wouldn't use this index as anything more than anecdotal evidence for a slowdown as I don't trust econometric extrapolations of GDP growth from just one data input. 

The price of diesel fuel is still climbing, which makes little sense in light of the Ceridian-UCLA index's findings until you consider regional bias.  Refinery outages on the East Coast have a funny way of making prices jump. 

This is all mostly bad news, and yet some truckers like Old Dominion are determined to keep hiking base rates.  I wouldn't do that if I were running a trucking company in this environment.  I'd use the above data in the next collective bargaining round to force the Teamsters to cough up some givebacks.  I guess I care more about shareholder value than being nice.  I'm funny that way. 

Full disclosure:  No position in ODFL.