Dec 292010

New home inventories drop below 200k, but still represent 8+ months of supply

Posted By: Tom Sanderson
Date Posted:  Wednesday, December 29, 2010  8:00 AM

Seasonally adjusted new home inventory fell to 8.2 months of supply in November from 8.8 months in October. The absolute inventory of new homes continues to fall and is now at 197 thousand, the lowest level seen since the late 1960's, and the first month to drop below 200k. Any recovery in the rate of sales would quickly deplete the low absolute inventory level and lead to a significant increase in housing starts (and freight) but that does not appear likely in the near term. The vertical bars in the graphs represent recessions.


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Categories: Housing starts, sales, and inventory
Dec 282010

Same store sales data remains weak

Posted By: Tom Sanderson
Date Posted:  Tuesday, December 28, 2010  2:00 PM

Same store sales data shows ongoing weakness as only one for the top 10 retailers posted growth of more than 3%; Costco at 5.0%. Three of the top 10 showed declining same store sales in their most recent reporting period including giant Wal-Mart. The data is consistent with overall retail sales numbers, but it brings home the message to see how even the best retailers are struggling to achieve adequate sales growth. Overall November retail sales are stronger, and I would expect to see somewhat better results as Q4 same store sales numbers get published. Results have improved from 2009 when same store sales for the same reporting period generally showed worse comparisons. The retail segment drives a tremendous amount of freight transportation and this data shows that demand for freight transportation is likely to remain weak in the near term.


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Categories: Retail sales and same store sales
Dec 282010

Retail sales regaining lost ground with strong growth

Posted By: Tom Sanderson
Date Posted:  Tuesday, December 28, 2010  11:00 AM

Seasonally adjusted real retail sales increased in November to $172.8 billion from $171.6 billion in October. (Note that actual sales are deflated using CPI 1982-84=100.) Year-over-year growth was 5.90%, marking the third straight month over 5% growth. From peak to current, retail sales are only off 4.2%, a much smaller percentage decline than what has occurred in the housing and auto markets. September sales were 9.3% higher than the trough of the recent recession. From March 2010 through September 2010 retail sales numbers were relatively flat, but the last two months have shown a strong recovery. The vertical bars in the graph represent recessions.


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Categories: Retail sales and same store sales
Dec 282010

Auto assemblies drop in November

Posted By: Tom Sanderson
Date Posted:  Tuesday, December 28, 2010  8:00 AM

U.S. assemblies of autos and light trucks decreased to a seasonally adjusted level of 7.37 million in November from 8.00 million in October. Seasonally adjusted assemblies had been averaging 8 million annually for several months before the November drop off. Our graph is a 3-month moving average of the seasonally adjusted annualized sales, and shows strong growth for 2010, but still very depressed levels compared to historical assembly volumes.


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Categories: Auto sales and assemblies
Dec 272010

Diesel prices continue to climb

Posted By: Tom Sanderson
Date Posted:  Monday, December 27, 2010  5:55 PM

Weekly retail on-highway U.S. diesel prices increased by 4.6 cents to $3.294 per gallon, and are up 13.2 cents in the last 4 weeks. Prices are at the highest level since 10/27/08, when prices were rapidly falling. Diesel prices peaked at $4.764 per gallon in July of 2008 and were above $3 per gallon from September 24, 2007 to November 3, 2008. Up until the last two months, prices in 2010 had fallen between pricing levels of the prior two years, but now exceed 2008 and 2009 prices for the same week which is better illustrated in our second graph.


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Categories: Diesel fuel prices
Dec 272010

Housing starts remain very low

Posted By: Tom Sanderson
Date Posted:  Monday, December 27, 2010  3:30 PM

November housing starts totaled 555 thousand (seasonally adjusted annual rate), up from a revised 534 thousand in October. Housing starts remain far below the average of just over 1.5 million per year over the last 40+ years, and even farther below the 2.2 million peak of the most recent housing boom. Total starts have been under 1 million (SAAR) for 29 straight months, averaging only 612k during this stretch. The all-time low was 477 thousand in April 2009. Single-unit structure starts were only 465 thousand in November. Since 1968, the U.S. population has grown from 200 million to over 300 million. Low housing starts not only impact transportation demand for building products but also for appliances, furniture, and other related items. The vertical bars represent recessions.


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Categories: Housing starts, sales, and inventory
Dec 272010

LTL revenue per ton is up about 5% year-over-year

Posted By: Tom Sanderson
Date Posted:  Monday, December 27, 2010  2:09 PM

Stifel Nicolaus reports LTL yields ($/ton) running about 5% ahead of yields at the same time last year, but still well below yields seen prior to the recession. For 2011 Stifel is projecting 5-7 percent annual increases and then tapering off to less than 5% in 2012. It is important to keep in mind that yield is not the equivalent of price and can be influenced by changes in weight per shipment, length of haul, and freight classification.

 


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Categories: Carrier rate graphs
Dec 152010

Flatbed capacity-demand balance is holding steady, but capacity is tighter than normal for Q4

Posted By: Tom Sanderson
Date Posted:  Wednesday, December 15, 2010  8:00 AM

Morgan Stanley's flatbed freight index is holding steady and is far off the pace of Q2 2010 indicating more readily available capacity at this time compared to Q2 but still a somewhat more tight capacity environment than at this time in the most of the previous years. The normal Q4 loosening of flatbed capacity does not seem to be happening this year. The flatbed market was particularly hard hit by the fall off in housing starts, but has gained some ground with the growth in U. S. manufacturing. The index measures incremental demand for flatbed truckload services compared to incremental supply. The higher the index the tighter is capacity relative to demand when compared to a prior period.

Graph reproduced with permission from Morgan Stanley. For more information contact: Adam Longson at Adam.Longson@morganstanley.com or Bill Green at William.Greene@morganstanley.com.


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Categories: Morgan Stanley capacity and demand graphs
Dec 142010

Refrigerated truckload capacity remains tight

Posted By: Tom Sanderson
Date Posted:  Tuesday, December 14, 2010  3:00 PM

Morgan Stanley's refrigerated truckload freight index has been rising over the last few months indicating tighter capacity in this segment. The index is still not back to the level of Q2 2010 but is well above most of the recent years for Q4. Refrigerated capacity continues to be very tight relative to 2009 and to most other recent years. The exception is the hurricane-induced capacity shortages at the end of 2005 and the strong freight market at the end of 2004. The pricing environment in this segment clearly favors the carriers at this point. The index measures incremental demand for refrigerated truckload services compared to incremental supply. The higher the index the tighter is capacity relative to demand when compared to a prior period.

Graph reproduced with permission from Morgan Stanley. For more information contact: Adam Longson at Adam.Longson@morganstanley.com or Bill Green at William.Greene@morganstanley.com.


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Categories: Morgan Stanley capacity and demand graphs
Dec 142010

Truckload dry van index is not showing a year-end decline

Posted By: Tom Sanderson
Date Posted:  Tuesday, December 14, 2010  10:03 AM

Morgan Stanley's dry van truckload freight index has flattened out at a level slightly below the 1995-2008 average for this time of year. The index is not dropping as much as was the case at the end of 2006 and 2008, but is closer to the pattern of 2007, which finished the year with a slight tightening of capacity. Capacity tightness has eased significantly compared to Q2 2010. While capacity remains tighter than in 2009, the spread between 2009 and 2010 has narrowed. The index measures incremental demand for dry-van truckload services compared to incremental supply. The higher the index the tighter is capacity relative to demand when compared to a prior period. In Q2 it was starting to look like we may see a repeat of the TL capacity shortages of 2004 and 2005. While that has not happened yet, we have also not seen as readily available capacity at this time of year as has been the case in recent years.

Graph reproduced with permission from Morgan Stanley. For more information contact: Adam Longson at Adam.Longson@morganstanley.com or Bill Green at William.Greene@morganstanley.com.


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Categories: Morgan Stanley capacity and demand graphs
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