Trucking is starting to show growth that many economists associate with a true improvement in the United States economy, the Associated Press reported.
Although the industry is still negatively affected by high diesel prices and insurance costs, analysts said trucking companies have been able to pass along most of these expenses to their customers as a result of tight capacity and increased demand, according to AP.
Merrill Lynch raised its third-quarter earnings estimates September 9 for Werner Enterprises Inc, Swift Transportation Co, and J B Hunt Transport Services Inc, Bloomberg reported. The Dow Jones Trucking Index, which tracks 38 companies in the sector, is up 33% over the past year.
American Trucking Associations said freight tonnage rose 2% in July compared with a year ago, the second straight monthly increase on a year-over-year basis.
Analysts said that in 2002, some large trucking companies reported increased volumes and higher profits due to consolidation, AP said. This year, however, strength in the retail and manufacturing sectors are the catalysts for growing tonnage.
Based on reports of August sales growth at Wal-Mart Stores Inc, Target Corp, and other major retailers, Merrill Lynch trucking analyst Ken Hoexter expects monthly freight volumes to increase for the remainder of the year, AP said.