Trucking demand still strong

And should remain strong for years to come, despite the rise in fuel prices. With the massive drop in wide-body capacity as domestic airlines have reconfigured their fleets to much smaller, narrow-body aircraft, not to mention the reduction of flights as airlines steer themselves in and out of bankruptcy, shippers and forwarders alike have come to see trucking as a viable alternative.

In addition the seafreight market has also expanded the use of trucking as global trade has boomed in recent years. Cross-dock operations, CFS stations, intermodal operations, etc all make use of trucking, which has also ramped up demand.

Despite transportation stocks taking a beating recently, Kirk Thompson of J.B. Hunt sets the record straight for the so called “analysts” :

In an e-mail statement provided to The Morning News, Thompson disagreed with analysts who blame a slowing economy for the downturn in transportation stock prices.

“Contrary to the melodramatic hand-wringing of some so-called ‘experts,’ we have not seen any material change in the freight economy compared to a year ago,” Thompson’s statement said.

Thompson’s statements were originally part of an e-mail interview with Reuters.

Thompson said the company is being asked by customers to prepare for a brisk peak season and anticipates spot shortages of intermodal and truck capacity for the balance of 2006.

“We just haven’t seen anything that would imply there is a material reduction in freight shipments for the foreseeable future,” Thompson said in the statement.
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“Over-the-road driver pay for the industry as a whole needs to almost double to achieve the effect of drawing new people to the profession. Obviously that is a major, almost monumental, increase,” Thompson noted in the statement.

Analysts and Thompson agree a bright spot in the marketplace is intermodal transport — moving freight through a variety of means, including semi truck, rail and barge.

Thompson said in his statement that imports growing at double-digit rates, congested highways, driver scarcity and lower fuel surcharges are primary reasons more customers are motivated to use intermodal transport instead of truck.

J.B. Hunt has an advantage in the intermodal business because Burlington Northern Santa Fe no longer provides containers and J.B. Hunt has the largest fleet of containers in the industry, according to Thom Albrecht, an analyst with Stephens Inc.

Emphasis ours, that last sentence sort of jumped out at me. The growth in international trade and intermodal services will give those companies that have a lock on equipment a distinct advantage in the years to come.

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