ATA chief economist hopeful freight volumes will improve in H2 on lower diesel, oil prices, report says

Alison Gallant

NEW YORK , June 29, 2011 (press release) – Trucking stocks are on the downswing this week after the American Trucking Association (ATA) reported disappointing data. ATA Chief Economist Bob Costello claims that tuck tonnage has hit a "slow patch," renewing anxiety over the trucking sector's recovery. The Bedford Report examines the outlook for companies in the trucking industry and provides equity research on YRC Worldwide, Inc. (NASDAQ:YRCW - News) and Con-way, Inc. (NYSE:CNW - News).

The ATA's advance seasonally adjusted For-Hire Truck Tonnage Index decreased 2.3 percent in May after decreasing 0.6 percent in April. Despite current concerns regarding the economic recovery, Costello is "cautiously" optimistic that freight volumes will improve in the second half of the year along with economic activity. Lower oil and diesel prices should lead to a slightly better economic environment in the second half of the year, he said.

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The issue of fuel costs have many companies in the freight industry looking to move their focus from road freight to railways. Trains can carry loads in excess of 50 times greater than a semi-truck, leading some analysts to argue that the amount of freight moved on rails will surge.

Several truckers are taking initiatives to offset rising fuel prices without passing the uptick in costs onto customers. For example, YRC Worldwide has begun to shift to 5W full-synthetic motor oil, which will improve the miles-per-gallon efficiencies of the company's fleet and reduce waste motor oil.

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