Truckers Are Seeing Growing Freight Volumes

Trucking companies are reporting stronger freight demand as retailers and makers move to restock depleted inventories, during a sign of strengthening corporate confidence within the U.S. economy.

Old Dominion Freight Line Inc. and Saia Inc. both said within the week that tonnage on their trucks was up in the first weeks of the third quarter, while tight capacity and improving demand are driving prices on trucking’s spot markets to their highest levels of the year.

“Between strong consumer demand … and a producing pause, it appears the U.S. is basically light on inventory and retailers/manufacturers are rushing to urge products on shelves,” Citi analyst Christian Wetherbee wrote in an Aug. 21 research note.

Old Dominion, one among the most important U.S. truckers, said freight volumes and revenue rose in August compared with the previous year. The Thomasville, N.C., less-than-truckload carrier, which mixes multiple shipments on an equivalent truck, reported a 2.4% increase in daily tonnage last month. Revenue per hundredweight, a measure of pricing strength, rose 2.3% in August from the previous year, excluding fuel surcharges.

“This positive inflection in our revenue may be a results of improving demand trends from our customers within the industrial and retail sectors,” Chief Executive Greg Gantt said during a statement, though he noted “there are continuing risks to the domestic economy.”

Less-than-truckload competitor Saia, based in Johns Creek, Ga., said its daily tonnage rose 0.5% from the previous year.

“With the economic economy continuing to rebound month over month and robust activity within the TL [truckload] market, our sense was that LTL demand continued to accelerate because the quarter has progressed,” Stephens Inc. analyst Jack Atkins wrote during a Sept. 3 research note. “Looking ahead, we expect the strength within the broader freight market to persist through the top of the year.”

The upswing in demand and spot-market pricing is raising costs for businesses hustling to replenish goods after coronavirus lockdowns, especially for key transport lanes from West Coast seaports.

Demand measured by the ratio of loads to trucks jumped 132.5% year-over-year in August on trucking’s commodity exchange , where shippers book last-minute transportation, consistent with online freight marketplace DAT Solutions LLC. the typical commodity exchange price to rent an enormous rig last month was $2.22 per mile, up 22.3% from the previous year.

Mac Pinkerton, president of freight broker C.H. Robinson Worldwide Inc.’s North American Surface Transportation division, said during a recent interview that the recent growth in demand wasn’t evenly spread across sectors of the U.S. economy which overall freight business remains “fairly soft” because some industries are recovering more quickly than others.

“Go into a Target, a Walmart … you’ll still see empty shelves,” Mr. Pinkerton said. “Today they’re operating off some extremely low inventory just based off that shift in consumer buying behavior.”