Truckload tonnage, loads, and pricing for the full month of December were all among the best months of 2011, likely benefiting from equipment deliveries ahead of the accelerated depreciation expiration and continued strength in natural gas shale drilling, according to Jefferies & Co.
“However, the weekly diesel consumption data that we track continues to deteriorate,”managing directorPeter Nesvold said. “Home heating oil gets into this data and so the unseasonably warm winter undoubtedly is skewing the results negatively to some degree. Nonetheless, Northeast temperatures have moderated in recent weeks, while diesel consumption continues to decline year-over-year. While we have not seen confirmation of this deterioration in other data, our view is that this warrants additional caution and selectivity within the transportation space.”
According to complete TL load and pricing data for December released by American Trucking Associations (ATA), December loads surged 10.7% year-over-year, led by chemicals and flatbed.
“This likely reflected the culmination of accelerated depreciation, inventory replenishment, and an easier year-over-year comp,” Nesvold said. “Recall that the year-over-year growth in ATA tonnage for December was also the strongest in 14 years. Paradoxically, however, weekly diesel consumption continues to deteriorate sharply.”
The ATA reported that loads (seasonally-adjusted or SA) for the large TLs (>$30mn in revenue) were up 10.7% year-over-year in December (vs. our 5%-6% estimate and +5.5% year-over-year in November). SA industry-wide loads surged in December and posted the strongest year-over-year reading since June 2002, led by chemicals and flatbed. Of the trailer types, bulk chemicals posted the largest year-over-year increase in December loads (+28.1% year-over-year vs. +13.0% year-over-year in November), whereas dry van volumes increased on a year-over-year basis for the second consecutive month, rising 2.4% year-over-year in December (vs. +1.2% year-over-year in November).
“This strength in December truckload volumes likely reflected the culmination of accelerated depreciation, inventory replenishment, and an easier year-over-year comp,” Nesvold said.
Separately, ATA reported that SA truck tonnage was up a revised 10.3% Year-over-year in December (vs. +10.5% Year-over-year initially), following November's +6.1% Year-over-year gain. Our tonnage forecast range for full-year 2011 started at +3% to +5%. In 2011, tonnage improved 5.9% Year-over-year — modestly above the high end of our expectations.
Revenue per mile, net of fuel, was up a solid 5.3% year-over-year in December, matching November's gain of the same magnitude. Inside the data, short-haul (less than 500 miles) pricing deteriorated further, contracting 2.1% year-over-year in December (vs. -0.7% year-over-year in November). Dry van pricing rose 6.8% year-over-year (vs. +7.5% year-over-year in November), “although our sense is that this strength was concentrated in the medium-haul segment of the market. According to the ATA data, TL pricing grew 5.8% year-over-year in 2011, accelerating from 2010’s 4.5% Year-over-year pace. We initially believe the industry can hold low-single-digit price increases in 2012.”
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