Truckload Demand Strong But Slowing

Morgan Stanley index shows demand levels slipping, capacity stabilizing
The pace of recovery is slowing for truckload carriers, as truck capacity stabilizes at a lower level, according to the May 28 Morgan Stanley Truckload Freight Index.

The daily TL index rose 5.2 percent this week to 4.42 on May 28, up 21.9 percent from a year ago and 14.5 percent from April 30. The index rose 29.4 percent in April from March and 28.2 percent from February through the end of March.

"Incremental demand is still improving, but marginally slower than the historic seasonality would suggest," Morgan Stanley analysts Adam Longson and William Greene said. "Incremental supply is trending with normal seasonality."

That's helping to keep a lid on truckload rates, with carriers reporting "fairly limited" gains, the analysts said. While capacity has tightened, "Shippers are not yet facing an utter lack of capacity," they said. "Carriers have more room for utilization to rise."

Truckload capacity is stabilizing after tightening considerably, they said in the index report. That may reflect a reduction in carrier bankruptcies as freight volume rises, boosting finances, and the return of some idled trucks to service, they said.

The analysts are looking to the peak season. If demand remains strong or picks up, that could leave shippers struggling to find capacity, they said.

(Source:www.joc.com)