Calling it "the worst market in a generation," transportation forecasting firm FTR Associates released its mid-month North American Commercial Truck and Trailer Outlook flash report this week, showing a further weakening in freight and equipment demand.


With economic activity on pace to worsen in the first quarter from the deep declines already registered in the fourth quarter of 2008, the industry is experiencing sharp drops in freight volume equal to the very low levels of the 1982 recession.

Loadings were down 7 percent year over year in January following a decline of 10 percent in December. For the year, loadings are now forecast to fall 7.3 percent in 2009, much worse than the estimated drop of 3.5 percent from just two months ago.

FTR expects year-over-year tonnage freight drops to bottom at -10.3 percent in the second quarter before beginning a slow rise to a still stressful -6.6 percent in the fourth quarter of this year.

FTR calls the amount of excess capacity in the market "troubling." Its latest forecast shows capacity utilization staying below 70 percent through the third quarter of this year. "Many truckers will be losing money operating at these levels."

For truckers this promises steadily increasing pressure on rates into the summer months. When coupled with tightened availability of credit these freight numbers translate into very low truck production numbers. The already low January order levels could be the highest of the year.

North American Class 8 demand weakened with order activity in January running at an annual rate of only 93,500 units. FTR is now forecasting North American factory shipments of Class 8 trucks at below 125,000 for 2009.

Eric Starks, president of FTR, pointed out how negative things look: "The continued economic deterioration puts us on course for a -10 percent freight year. The worst market in a generation."

The full report which will be available to subscribers in early March will present an overview of some of the key indicators that FTR is tracking to understand when a possible economic bottom has been reached.
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