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Our 13th Annual Virtual Transport & Industrials Conference takes place this week on 5/19-21, and we have over 80 Transport, Airline, and Multi-Industry companies scheduled to present and/or host 1x1 meetings.
The who’s who of transportation will gather via GoToMeeting links at our 13th Annual Virtual Transport & Industrials Conference this week on May 19-21 (R.I.P. Marriott East Side). We’ve got over 80 transportation, airline, and multi-industry companies presenting and/or hosting 1x1 meetings.
We spoke with a mid-sized private LTL and TL carrier about recent LTL and TL demand and pricing trends. This trucker's LTL shipments declined 22% y/y in April, while TL miles declined 12% y/y, both in line with most public LTL and TL comps. This carrier noted that his volumes with his core contracted customers are down even more, and he’s had to backfill his trucks in the spot market at spot rates that are 25%-30% below his contractual rates. Our contact received a loan as part of the Paycheck Protection Program on May 8, and that source of funding will run out by the first week in June. With that funding, he has been able to keep his employees on the payroll and give 15% bonuses to drivers and maintenance workers. But when that funding runs out after 8 weeks, this carrier won’t be able to keep moving freight at such heavily discounted spot rates.
Quote of the week: “Most days, the Post Office sends one truckload of mail to the domestic regional sorting facility in Michigan. But, on the week before holidays, we see a surge. On Valentine’s Day, we send two trucks. On Christmas, four, packed to the brim. And if history is any guide, we see some spillover into a fifth truck on Mother’s Day… the mother of all mail days".
Our WR Transport Index bounced back nearly 11% in April, underperforming the S&P 500 by 210bp but outperforming the XLI by 180bp. Transports are now down 12.6% YTD, basically right in line with the S&P 500, but materially outperforming the XLI by over 1,000bp.
We spoke with a private freight forwarder about international freight trends. Overall volumes for our contact are down ~20%, with ocean imports in the U.S. down even more and ocean exports holding up relatively better. Given the weak volume environment, our contact estimates that ocean carriers have reduced schedules by 20%-25% with a spike in blank sailings, so even though demand is down so much, ocean rates are holding relatively steady. This forwarder noted that some medical freight that would normally travel by ocean has shifted to air. However, other shippers that typically use airfreight have shifted to premium ocean freight because airfreight rates out of China are just too high in the $15-$20/kilo range.
Our WR Transport index increased 0.3% last week, outperforming the 1.3% decline in the S&P 500 and more materially outperforming the 2.4% drop in the XLI. The LTLs (+3%) and Rails (up slightly) each outperformed last week, while the asset-light Forwarders (-4%) and Integrators (-2%) each underperformed. So far YTD, our Transport Index is now down 13% YTD, slightly underperforming the 12% drop in the S&P 500 but materially performing the XLI which is down over 24%.
We spoke with a large chemicals shipper about recent rail service, pricing, and demand trends during the COVID-19 crisis. This shipper noted that chemicals demand from the automotive industry is down the most, but this weakness has been partially offset by chemicals going into paints and household cleaners. However, the areas of strength have generally been more beneficial to truck volumes, so rail volumes for this shipper are currently down about 15% y/y. Our contact expects a modest rebound in traffic once shelter-in-place mandates are lifted, so he currently expects his rail volumes to fall around 10% for the full year. Looking longer term, our contact suspects some companies may delay or cancel major capital projects. But on the chemicals side, our contact noted that these are major decisions with lasting implications for decades.
We spoke with three private LTL carriers about recent tonnage and pricing trends. All three carriers have seen a material reduction in shipment activity over the past couple weeks with more and more customers shutting down. The first LTL noted that his tonnage is tracking down 10%-15% y/y the past couple of weeks, down from 5%-10% tonnage growth in January and February. The second carrier noted that shipment levels over the past week are tracking down 15%-20% sequentially from last month, with most of the declines driven by businesses that have shut down and with much more modest declines with businesses that have remained operational. The last carrier has seen tonnage decline nearly 30% y/y this past week, down from -20% the prior week and tonnage growth of around +5% in January and February.
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