Consumers Are Down But Not Out

Both retail sales and manufacturing declined during October, falling short of consensus expectations. Despite this, consumer sentiment remains resilient

Specifically, national retail sales declined month-over-month by 0.29% in October (.pdf), which was the first monthly decline in sales volumes since June. Meanwhile, industrial production shed 0.4% during October, which was the second consecutive monthly decline in the index. The manufacturing component of industrial production fell by 0.9%.

Understandably, the advent of Hurricane Sandy in the Northeast incited some of these declines in production and retail sales. The Washington Post quotes the U.S. Commerce Department as noting, “Even though we cannot isolate the effect, we did receive indications from the companies that the hurricane had both positive and negative effects on the retail sales data.”

However, some pundits argue that the hurricane alone does not explain the overall weakening of consumer demand.A large portion of the drop in retail sales is attributable to hurricane-induced declines in auto and other durable goods sales, while the remainder was propped up largely by gasoline price increases in the Northeast.

Ultimately, the hurricane confounds any deep evaluation of this report on retail sales, especially considering the report is juxtaposed against a five-year record high in Consumer Sentiment, per the Thomson Reuters / University of Michigan Index. The cautious takeaway is that while consumers have taken a beating, they remain optimistic about the holiday season. This doesn’t bode especially well for trucking, but likewise the reports are not especially bad news either.

Are Hurricanes Good for Trucking?

In the wake of Hurricane Sandy—as is often the case following a major natural disaster—economic pundits perform an intellectual dance, arguing whether or not a hurricane is ultimately good for the economy, especially during a recession. I want to take a narrower perspective, asking whether trucking volumes improve following a major hurricane.

The theory goes as follows. A hurricane such as Sandy destroys a large amount of physical property (e.g. houses, office buildings, shops, and infrastructure). Following the storm, the area slowly rebuilds, often renovating older and deteriorated construction along the way. This (re)construction activity requires a large volume of building materials, which—you guessed it—need to be trucked.

Although the story seems plausible, it’s ultimately an empirical question whether a hurricane leads to a significant uptick in trucking activity. To investigate this, I’ve plotted the timing of several major U.S. hurricanes along with the Transportation Services Index for Freight,reported monthly by the Bureau of Transportation Statistics since 1990. This index measures national freight activity and is seasonally-adjusted, which is key in this case because the “hurricane season” largely overlaps the annual peak trucking season. Thus, the test is to see whether hurricanes generate spikes in transportation volumes.

Eleven of the thirty most costly U.S. mainland tropical cyclones from 1900-2010 have occurred since 1990, per the National Oceanic and Atmospheric Administration (NOAA, .pdf report, Table 3a. on p. 9). To these, I’ve added Hurricane Irene (August 2011)for the figure below.

You can of course pass your own judgment on the results, but I think the data speak for themselves. To the extent that hurricanes boost trucking activity, the increase looks pretty small.

This is not to say that trucking is unaffected. In particular, some types of trailers (especially flatbeds) should realize bigger gains in volumes than others. But, I wouldn’t count on Sandy to revitalize the trucking industry.

 

Jeremy West
Internet Truckstop Economist

 

 

Press Release – Internet Truckstop Launches a Platform to Analyze, Organize, Create and Execute the RFP Process

New Plymouth, Idaho–Internet Truckstop, the largest web-based freight matching service in the transportation industry, has launched a new request for proposal suite of services that was previously not available to brokers or third party logistic companies.

Internet Truckstop’s new Request for Proposal (RFP) Suite, is an advanced, cloud based system which requires no software installation and allows users to create, distribute and compete in the RFP Process.

“Our goal in developing the RFP suite was to provide our customers with a ground breaking RFP solution that would reduce the amount of time spent compiling data while also providing additional carrier capacity if needed when bidding on a RFP’s,” says Leigh Foxall, Director, Freight Matching. “Users can invite their pre-qualified core carrier group to participate in an RFP session as well as reach out to new potential carriers that are members of the Internet Truckstop community. Our service allows for customization to meet a user specific needs with user preferences being customized all the way down to lane choices. Users can quickly respond to RFP’s with a detailed understanding of their own available margins per lane as truck and rate history is uploaded directly into the platform.”

Internet Truckstop says their new RFP suite will help users manage their businesses and provide a single on-demand system to easily consolidate, organize, schedule, host, and award or accept lanes to selected transportation partners.

For more information visit www.truckstop.com or call 1-800-203-2540 x 6185
About Internet Truckstop
Founded in 1995, Internet Truckstop is the first and largest freight matching service on the web. Internet Truckstop offers more tools than any other freight matching service available. These easy-to-use tools, the largest freight database, and a commitment to the transportation industry make Internet Truckstop the leader in Internet freight matching.

Press Release – United Perishable Logistics secures a $250,000 Broker Bond with ITS Financial Services, LLC

United Perishable Logistics secures a $250,000 Broker Bond with ITS Financial Services, LLC

New Plymouth, Idaho – October 30, 2012- United Perishable Logistics (UPL) is pleased to announce the addition of a $250,000 broker’s surety bond provided through ITS Financial Services, LLC. This bond is in advance and well in excess of the 75K mandate currently scheduled to go into effect October 1, 2013 for all Brokers and Freight Forwarders. This action will provide UPL’s Shipper customers and Carrier clients additional financial security, as well as, demonstrating the financial strength of this rapidly growing freight brokerage.

“UPL secured the bond to lift the bar within the brokerage community and express our strong commitment to small and large trucking fleets alike, that our interests are aligned in ensuring prompt and accurate payment. Furthermore, this action is a demonstration of our confidence in the ITS bond and credit program as it works to protect the integrity of the freight industry,” says Steve Martori – Managing Member – United Perishable Logistics.

ITS Financial Services, LLC (ITSFS) is an affiliate of Internet Truckstop® providing bonding options for truckstop.com members. ITSFS also manages the Diamond Broker Program. Through this program ITSFS advertises the credit worthiness, the quality and size, as well as, the current status of a member’s bond to the 800,000 trucks using Internet Truckstop.

“The industry is well aware Diamond Broker members consistently meet and exceed industry standards. UPL’s action is another fine example. ITSFS is very pleased to provide this option, as well as, adverting this to all truckstop.com subscribers,” says Joe Foxall, CFO-ITS Financial Services, LLC

About United Perishable Logistics
United Perishable Logistics is a freight brokerage company specializing in third party transportation of refrigerated goods throughout the United States and Canada. Our 20 years of experience has taught us that trust and reliability are characteristics that cannot be compromised. UPL is dedicated to maintaining the highest business, credit and financial ratings in the industry which has earned us an outstanding reputation with both our carriers and customers.

About Diamond Broker Program
Participating members receive a diamond designation attached to every load they post with Internet Truckstop. The Diamond Broker quickly delivers valuable assurances to Carriers regarding credit, performance history and the quality of their bond. In addition to these competitive advantages the Diamond Broker receives experienced support to protect their bond, their credit score and their good name.

About Internet Truckstop
Founded in 1995, Internet Truckstop is the first and largest freight matching service on the web. Internet Truckstop offers more tools than any other freight matching service available. These easy-to-use tools, the largest freight database, and a commitment to the transportation industry make Internet Truckstop the leader in Internet freight matching.

For more information contact Steve Martori at 480-225-2444 or ITS Financial Services at 866-812-9675

Surprise, Surprise… the Manufacturing Sector Remains Choppy

By Jeremy West, Internet Truckstop Economist

Over the past few months, it has seemed like U.S. manufacturers are treading water. Factory output isn’t dramatically sinking, as occurs whenever the economy is entering a recession. But, on the other hand, we’re not seeing any production gains worth cheering about either.

Manufacturing Orders and Production

Two basic metrics are tracked for manufacturing output: the quantity of current production and the volume of orders for future production. Last Thursday, the Census Bureau reported that new orders in August for factory production fell 5.2% month-over-month and 2.5% year-over-year. This was the first year-over-year decline in new orders since November 2009.

Much of this decline resulted from a 101.8% drop in orders for commercial aircraft. As shown in the figure, orders excluding transportation equipment increased by 0.28% YOY. Regardless, the message is clear: manufacturing production is stalling.

Separately, the Institute for Supply Management reported that the Purchasing Managers’ Index (PMI) increased to 51.5 during September. This was positive news: any value above 50 indicates manufacturing growth, and the index has been below 50 since May. The next few months will show whether this represents a temporary spike in manufacturing activity or a reversal of the contraction seen in the manufacturing sector during 2012Q2.

So, the production picture isn’t entirely gloomy, and some regions of the country are performing better than others. During September, manufacturing output improved in Texas and in the Central Atlantic regions, worsened in New York and in much of the Midwest, and remained largely flat in the Philadelphia region.

Taken together, these reports offer a mixed outlook for total manufacturing—and, subsequently, trucking—with aggregate production activity trending to the downside. The next Federal Reserve Industrial Production and Manufacturing report is scheduled for October 16th. Don’t be surprised to find that factories continued to slowly churn.

Market Demand Index (MDI) Decreases 2%

FOR IMMEDIATE RELEASE

NEW PLYMOUTH, ID (September 25, 2012) – Internet Truckstop, the largest web-based freight matching service in the transportation industry reports that the Market Demand Index (MDI) decreased 2% to 11.64 from 11.83 the previous week as reported in the weekly Trans4Cast.

The overall average equipment rate decreased 2% to $2.04 from $2.09 the previous week. Flatbed rates decreased 3% to $1.90 from $1.96 the previous week. Reefer rates decreased 3% to $2.08 from $2.16 the previous week. Specialized truck rates increased 2% to $2.45 from $2.41 the previous week. Van rates decreased 5% to $1.72 from $1.82 the previous week.

“With an upcoming national election, a looming “fiscal cliff,” and continuing instability in the Eurozone, the economic climate is quite unclear. And, the outlook will remain murky until businesses and consumers can better determine the political environment in which they must operate.” Jeremy West, Internet Truckstop Economist

About Trans4Cast powered by Internet Truckstop
Trans4Cast
is the compilation of highly relevant data, easily accessible to all trucking professionals. The Market Demand Index (MDI), a measure of relative truck demand, is culled from Internet Truckstop data.  Internet Truckstop compiles this weekly report that will assist in making critical business decisions. The report is now a web series with a news anchor and appears as the Industry Economic Update  on BigTruckTV.com, Internet Truckstop, and Truckload Carriers Association. The show is produced bi-weekly and can be accessed online 24/7. Jeremy West is the economic consultant preparing this report. He holds a bachelor of science in Economics, with minor degrees in Business and Creative Studies, from Texas A&M University, where he is currently completing a doctorate in Economics. For more information on Trans4Cast, please contact Roxanne Bullard at 1-800-203-2540 ext. 6230.

How Much is Policy Uncertainty Hindering the Economy?

By Jeremy West, Internet Truckstop Economist

Consider the following situation:

You operate a small carrier and are considering adding a few trucks to your fleet. There is a (hypothetical) politician who is campaigning for a U.S. Senate seat on a platform of further expanding the FMCSA regulations to require any commercial truck that crosses state lines to have two drivers in the cab with combined driving experience of at least twenty years. (You may think this hypothetical rule sounds ridiculous, but some opinions of the current CSA regulations indicate that such a proposal would not be that big of a leap). Suppose that this politician has a sizeable chance of winning his campaign. Are you going to buy any new trucks today, or wait (at least) until after the November election?

The above situation illustrates the role of “policy uncertainty” in shaping economic decisions. In this case, whether or not you invest in expanding your fleet will be partly determined by the outcome of the upcoming election. As a result of this uncertainty, you forgo making the decision until after the election outcome is known.

It isn’t just elections that create policy uncertainty. As was mentioned in a post to the Industry Economic Update LinkedIn group, this practice of delaying investment decisions is currently widespread in the economy. In a recent article on political uncertainty, the Washington Times notes, “[if] there’s one thing investors and employers hate, it’s not knowing what lies ahead.”

Two groups of academic researchers have attempted to quantify the effect of policy uncertainty on the economy. In their article, “Measuring Economic Policy Uncertainty” (pdf), Scott R. Baker, Nicholas Bloom, and Steven J. Davis link several measures of political uncertainty (such as the frequency of media references to policy uncertainty) to declines in real GDP, private investment, and aggregate employment. Separately, Sylvain Leduc and Zheng Liu find that uncertainty about future economic conditions is substantially responsible for the sluggish economic recovery that has followed the recession.

With an upcoming national election, a looming “fiscal cliff,” and continuing instability in the Eurozone, the economic climate is quite unclear. The outlook will remain murky until businesses and consumers can better determine the political environment in which they must operate.

Press Release – Tran4Cast Powered by Internet Truckstop Market Demand Index (MDI) Decreases 10%

Tran4Cast Powered by Internet Truckstop Market Demand Index (MDI) Decreases 10%

NEW PLYMOUTH, Idaho, September 18, 2012– Internet Truckstop, the largest web-based freight matching service in the transportation industry reports that the Market Demand Index (MDI) decreased 10% to 11.83 from 13.2 the previous week as reported in the weekly Trans4Cast.

The overall average equipment rate decreased 3% to $2.09 from $2.16 the previous week. Flatbed rates decreased 1% to $1.96 from $1.98 the previous week. Reefer rates decreased 6% to $2.16 from $2.30 the previous week. Specialized truck rates decreased 3% to $2.41 from $2.49 the previous week. Van rates decreased 2% to $1.82 from $1.86 the previous week.

“The economic climate remains tumultuous for trucking. On Friday, the Census Bureau reported that August retail sales increased nearly 1% from July, while the Federal Reserve reported that manufacturing activity shed 0.7% over the same period. Trucking activity should be seasonally strong through November, but broader instability continues to temper volumes and rates.”
Jeremy West, Internet Truckstop Economist

About Internet Truckstop
Founded in 1995, Internet Truckstop is the first and largest freight matching service on the web. Internet Truckstop offers more tools than any other freight matching service available. These easy-to-use tools, the largest freight database, and a commitment to the transportation industry make Internet Truckstop the leader in Internet freight matching.

About Trans4Cast powered by Internet Truckstop

Trans4Cast is the compilation of highly relevant data, easily accessible to all trucking professionals. The Market Demand Index (MDI), a measure of relative truck demand, is culled from Internet Truckstop data. Internet Truckstop compiles this weekly report that will assist in making critical business decisions. The report is now a web series with a news anchor and appears as the Industry Economic Update on BigTruckTV.com, Internet Truckstop, and Truckload Carriers Association. The show is produced bi-weekly and can be accessed online 24/7. Jeremy West is the economic consultant preparing this report. He holds a bachelor of science in Economics, with minor degrees in Business and Creative Studies, from Texas A&M University, where he is currently completing a doctorate in Economics. For more information on Trans4Cast, please contact Roxanne Bullard at 1-800-203-2540 ext. 6230.

Press Release: 75K and 100K Diamond Broker Bond Program Now Available

FOR IMMEDIATE RELEASE:

ITS Financial Services, LLC launches 75K and 100K bond program for its Diamond Broker members

New Plymouth, ID; Schaumburg, IL; Portland, OR – September 12, 2012 – ITS Financial Services, LLC announces the addition of a high quality, higher limit surety bond as part of its Diamond Broker program. The offering is in response to the newly enacted Highway Reauthorization Bill mandating the higher bond limit for all Brokerages and Freight Forwarders next July.

Through a continuing partnership with Roanoke Underwriting, a division of Roanoke Insurance Group, Inc. and McGriff, Seibels and Williams, Inc., the program will allow members to meet the new requirement at a manageable price. The program provides for a 75K and a 100K option. Initial set up cost are below $6,600 and $8,600 respectively for the first year. Annual premium and fees are below $2,900 and $3,700 in future years. The program does not require the maintenance of collateral which addresses a major industry concern particularly for smaller to mid-sized firms.  In addition, Internet Truckstop can advertise the size of the bond, as well as, the current status of the bond to the nearly 800,000 trucks using truckstop.com.

We are pleased to be able to provide this option in such a tight credit environment.  The costs are manageable and it does not require our members to tie up assets as collateral.  Assets which would otherwise be used in growing their businesses.  I believe this program will be a real benefit to many of our members who consistently meet and exceed industry standards.” says Joe Foxall, CFO-ITS Financial Services, LLC

Diamond Broker Program / Availability
Members of Internet Truckstop who maintain an “A” experience factor with Internet Truckstop and meet certain credit and performance criteria are eligible to participate in the Diamond Broker program.  At present membership includes over 1,200 quality Brokers. Members have access to surety bonds underwritten by the American Alternative Insurance Corporation (AAIC).  AAIC has an A.M. Best rating of A+ (Superior) which is the highest industry rating.

About Roanoke Insurance Group, Inc.
Roanoke Insurance Group, Inc. specializes in bonds and in 2010 celebrated its 75th year servicing this market. Unlike many other underwriters, bonds are the focus of their business. By partnering with Roanoke Underwriting a high level of experience, knowledge and stability can be delivered to our customers. Aside from price and value, what is particularly unique about this product is the simplified purchase process.

“Roanoke Underwriting, working with ITS Financial Services and McGriff, Seibels & Williams of Oregon, is pleased to provide a bond program for ITS customers.  We have been working with our underwriters in advance of the legislation to develop an affordable bond program for all credit worthy ITS members.  Our program is underwriter approved and is available in advance of the deadline to file a $75,000 bond set for summer 2013,” says Colleen Clarke, Vice President, Surety, Roanoke Underwriting.

The Partners Roles
ITS Financial Services is an affiliate of Internet Truckstop and manages the Diamond Broker program. McGriff, Seibels & Williams, Inc. serves as the licensed agent for the bond. Roanoke Underwriting serves as the managing underwriter for the bond. This relationship allows ITS Financial to report the current status of the bond at all times. Should a claim occur, the proven resources of ITS Financial and Internet Truckstop can be utilized to help successfully resolve the claim.  At the same time, the fact that a bond is free of claims can be advertised to Carriers which is unique in the industry.

For more information on this product contact ITS Financial at
1-866-812-9675 x 6080

Press Release – Trand4Cast Powered by Internet Truckstop Market Demand Index (MDI) Increases 2%

New Plymouth, Idaho, September 11, 2012–Internet Truckstop, the largest web-based freight matching service in the transportation industry reports that the Market Demand Index (MDI) increased 2% to 13.2 from 12.96 the previous week as reported in the weekly Trans4Cast.

The overall average equipment rate decreased 1% to $2.16 from $2.17 the previous week. Flatbed rates decreased 2% to $1.98 from $2.01 the previous week. Reefer rates increased 4% to $2.30 from $2.21 the previous week. Specialized truck rates decreased 2% to $2.49 from $2.54 the previous week. Van rates decreased 3% to $1.86 from $1.92 the previous week.

One of the more disappointing economic reports last week was that the Institute for Supply Management’s proprietary PMI for manufacturing remained below 50 in August for the third consecutive month. The PMI is a composite measure of several dimensions of the supply chain, and any value below 50 reflects a contraction in U.S. manufacturing activity.

About Trans4Cast powered by Internet Truckstop
Trans4Cast
is the compilation of highly relevant data, easily accessible to all trucking professionals. The Market Demand Index (MDI), a measure of relative truck demand, is culled from Internet Truckstop data.  Internet Truckstop compiles this weekly report that will assist in making critical business decisions. The report is now a web series with a news anchor and appears as the Industry Economic Update  on BigTruckTV.com, Internet Truckstop, and Truckload Carriers Association. The show is produced bi-weekly and can be accessed online 24/7. Jeremy West is the economic consultant preparing this report. He holds a bachelor of science in Economics, with minor degrees in Business and Creative Studies, from Texas A&M University, where he is currently completing a doctorate in Economics. For more information on Trans4Cast, please contact Roxanne Bullard at 1-800-203-2540 ext. 6230.

About Internet Truckstop
Founded in 1995, Internet Truckstop is the first and largest freight matching service on the web. Internet Truckstop offers more tools than any other freight matching service available. These easy-to-use tools, the largest freight database, and a commitment to the transportation industry make Internet Truckstop the leader in Internet freight matching.

Source:
Stephanie Sternes
800-203-2540 ext. 6186
stephanies@truckstop.com