According to FTR Associates, Nashville, Ind., a leader in transportation forecasting, indications show both domestic intermodal loadings and truck freight weakening in early 2005.

Truck freight grew a scant 0.4% year-over-year in February, which is substantially below the 5-6% increases seen in the first half of 2004. The weakness in truck freight will further affect intermodal loadings as the trucking companies take back some of the freight they were willing to give up to intermodal when their own demand exceeded their capacity. Conversely, the short-term intermodal outlook has been affected positively by freight being imported to the U.S. as our trade deficit, especially with China, balloons.
Even with a slowdown in freight, truck and rail capacity continue to remain tight. Preliminary estimates show that U.S. tractor capacity in use fell slightly in the first quarter of this year but is still at historically high levels. With a preliminary reading of 95.7% recorded in the first quarter of 2005, tractor capacity has averaged 95.4% over the last six quarters. This is substantially higher than the previous peak seen in the first quarter of 1998 when it posted a reading of 91.2% and significantly higher than its historical average reading of 85%. Looking forward, capacity will start to ease throughout the year falling to 90.5% by the first quarter of 2006. This would suggest further pricing pressure on truck rates at least through the end of this year.
Although FTR had forecasted some slowdown in domestic intermodal loadings and truck freight, the combination of high oil prices, weak job growth and slowing freight growth possibly indicates a fundamental weakness in the domestic economy. Eric Starks, president of FTR, stated, “We have been concerned about oil prices and inflation risks for some time now and had been forecasting this type of slowing freight growth. However, we continue to remain optimistic about the economy and expect freight growth to improve as we move through the year. We will continue to monitor the economy closely to identify the impact to U.S. freight growth in the 2nd quarter and the balance of 2005."
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