May Commentaries

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The Coming Recovery. Will it be fast or slow?
By Steve Graham, FTR Partner

The latest economic data has been miserable. The U.S. economy is in a deep recession and signs of recovery are few. In almost every sector, there has been a record-breaking decline. Still, green shoots are starting to emerge as the nation begins to re-open. The question is now emerging, what will the recovery look like?

 

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Transportation Update
FTR | Transportation Intelligence™

April declines largest ever in manufacturing, industrial production, retail sales, and housing starts. New unemployment remain above 2 million even nine weeks into the COVID-19 crisis. Truck freight volumes continue to recover in stages. The rail space is a tale of two markets - carload activity is weak while intermodal has been trending back up. This weekly market update provides an overview of the transportation markets with data and commentary for all modes. 

 

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Mid-Year Economic Review
State of Freight Webinar Replay

It goes without saying that a lot has happened to the economy since our last review six months ago. Facing a pandemic of uncertain dimensions, governments worldwide have instituted controls that have halted activity in much of the economy. This is a situation without any historic parallel. The result is an unprecedented drop in economic activity centered on the present moment. By the end of this month the restart process will be underway. How it might unfold is the central question for this webinar.

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Conditions Indices & Equipment Orders

FTR’s March Trucking Conditions Index Previews the Industry’s Worst Quarter Ever

Trucking Conditions Index
FTR’s Trucking Conditions Index reading for March, at -8.69, is just the start of negative readings that almost certainly will lead to the worst quarter (Q2 2020) for the segment on record. FTR expects by far the worst monthly reading in April due to lockdowns related to the COVID-19 pandemic before readings recover to still-negative conditions. We do not anticipate any positive TCI readings until around the middle of 2021, although the pace of economic recovery remains uncertain.

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FTR’s Shippers Conditions Index for March at 19.7 Reflects Strong Favorable Market Conditions

FTR’s Shippers Conditions Index for March at 19.7, which more than doubled the level of February, reflects the most favorable market conditions ever. Operational challenges remain, but utilization, rates, and fuel costs all turned highly favorable due to COVID-related influences. FTR projects that increasingly favorable conditions for shippers will likely send this index significantly higher in Q2 as plunging capacity utilization causes rates to fall and fuel costs sink further.

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FTR Reports April Preliminary Net Trailer Orders Sink to Lowest Level in Modern Era at 300 Units

FTR reports preliminary net trailer orders for April sunk to the lowest level in the modern era (since 1990) coming in at just 300 units. April order activity was -95% m/m and
-98% y/y. Trailer orders for the past twelve months now total 162,000 units.

The severe recessionary conditions caused many fleets to pull back on orders previously scheduled for 2020 delivery and place very few new orders. The dry van segment was hit particularly hard and refrigerated van orders suffered some as well. Vocational orders remained tepid after falling significantly in March. Some specialty segments are holding up better under the stress. Numerous OEM plants were shut down for part of April; some for health reasons, some for lack of orders and some for a combination of the two.

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FTR Reports North American Class 8 Orders Plunge to the Lowest Level in Modern Era at 4,000 Units

FTR reports preliminary North American Class 8 orders plunged for the second month in a row to an unprecedented level of 4,000 units. April order activity was the lowest in the modern era (1996), 44% below March, and 73% less than a year ago. Class 8 orders for the last twelve months now total just 160,000 units.

Fleets are delaying ordering trucks until the economic uncertainty over the COVID-19 crisis abates. Fleets also canceled a significant number of orders which were scheduled for near-term deliveries. Orders are expected to rise in May to around 10,000 units. Class 8 order activity after that is highly dependent on the speed and strength of the economic recovery.

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