Sunday, December 9, 2012

A Very Ugly Freight Market

In preparation for my year-end economic forecasts and Model T 2013 stock market predictions, I thought it would be a good time to check the current status of the freight markets.  

Because the economy has been slow and needs some motivation, I have enlisted the cheerleaders from Good Shepherd High School to assist me in this endeavor. Excuse me, there has been a change.  These cheerleaders are actually from German Shepherd High School. 
  German Shepherd High Cheerleaders

Here’s what is happening in the freight world:

Truck Freight 

FTR (Freight Transportation Research) FTR Truck Loading Index
Latest Report: Declining 

Trend: Declining.  Index was growing nicely until hitting the wall in Q4. Expected to be at near 0% (year-over-year) at year end. 

Forecast: Skidding at 0% in Q1 before improving.

ATA Trucking Index 

Latestst Report:  Down 3.8%, at the lowest level since May 2011. 

Trend: Decreasing 

Forecast: Modest improvement in Q1

“Okay Cheerleaders, do your thing!”

You ain’t got no alibi. 
You ugly, oh yeah, You ugly 

Rail Freight 

Latest Report:  Carloads – Down 6.1% in October (y-o-y). It’s flat when you factor out declining coal shipments. Intermodal – Up 1.5% (y-o-y)  

Trend: Decreasing 

Forecast: Flat in Q1, before increasing the rest of the year. 

“What do you say Cheerleaders?”

Rickety Rick, Rickety Rack
Your train done run off that track,
You’re Grounded
Yo Mama says Your Grounded!
Port Freight Activity
Latest Report:  Inbound Freight – Up 5% (y-o-y) in October on the West Coast (Chinese imports), flat at most other ports.  Outbound Freight – Up slightly on the West Coast, down or flat for the rest. 

Trend: Declining 

Forecast: Flat in Q1 


You ain’t got nuthin’ to see
Cause you ain’t got no GDP,
You stagnant, oh yeah, you stagnant

Air Freight 

Latest Report:  Down around 0.4% from last year, year to date. 

Trend: Flat/Declining 

Forecast: Very bad Q4, 2013 to be much better 
Baltic Dry Index (measures world-wide shipping freight activity)

Latest Report:  Down 50% (y-o-y) 

Trend: Declining 

Forecast: Short-term, a modest improvement. Long-term, a 50% increase at the end of 2013. 

“Cheerleaders, help me!”

Two, Four, Six, Eight
You is in an awful state

The freight data is consistent with my forecast that the economy is bouncing between 0-2% GDP with no upward momentum.  It appears that we are falling to around 0% (the bottom of this cycle) at the end of the year.  I still don’t believe there we be a recession because the economy is moving so slowly.  It is the difference between hitting a wall at 5 mph versus 40 mph.  You hit the same wall, but the impact is much different. There just isn’t enough downward momentum to cause a significant recession.  

The freight forecasts suggest that this economic malaise will last through Q1.  The good news is that the rest of 2013 is forecast to be much stronger.  Wouldn’t it be great if we were talking about a new plan for economic growth instead of trying to keep from falling off a self-made cliff?  And just a reminder, while raising taxes is an economic plan; it is not an economic growth plan.

“Cheerleaders, do you have any final thoughts about this blog post?”  

You ain’t got no alibi. 
You ugly, oh yeah, You ugly

“You are talking about the economy, right? Well…..? (sigh) Suddenly I feel like I’m back in high school!”

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