The trucking industry can expect positive growth in year-over-year volumes in the first quarter of 2010
, according to Fitch Ratings. The downside, Fitch says, is that the recovery in freight will be slow with overall freight demand not expected to return to pre-recession levels until 2011 at the earliest.

"Consistent with the modest improvements in market conditions projected for next year, we expect the impact on freight transportation companies' ratings in 2010 to be relatively minor, although any changes in ratings or rating outlooks are likely to be more positive than negative," said Stephen Brown, director at Fitch.

According to Fitch, capacity rationalization has been more difficult for the trucking industry, due to its fragmented nature. The less-than-truckload sector, in particular, has suffered heavily as demand declines have significantly outpaced capacity reductions. LTL has also been hurt by YRC Worldwide's distressed financial position and the relatively aggressive manner in which several of its competitors have courted its customers over the past year. This has put more pressure on LTL pricing.

Fitch expects trucking industry volumes to grow slightly in 2010 as U.S. economic conditions improve and the industry's retail and industrial customers rebuild inventories. However, as the trucking industry has less exposure to the exported commodities like coal and agricultural products that will help strengthen railroad volumes next year, the pace of truck volume growth could be more muted than that of the rails. Fitch says continued consumer deleveraging and high unemployment will restrain the rate of demand growth.

Fitch also expects pricing to remain under pressure in 2010, particularly in the LTL sector, where the slow rate of volume growth will continue to leave the sector with overcapacity. In contrast, the truckload pricing was not as pressurized because of a large number of smaller players that left the market. As a result, truckload capacity has been somewhat better matched to demand, which has helped to provide some support to pricing in the sector.

According to Fitch's analysis, capital spending was well below historical levels in 2009 as a result of overcapacity and the delay in normal replacement of equipment. Capital spending should rise next year, however, as fleets begin to replace older units.