Sector Snap: Analyst sees trucking recovery

NEW YORK

A KeyBanc analyst said Thursday demand in the trucking industry is improving as downsizing and the failures of smaller companies have paved the way for existing trucks to carry more freight.

KeyBanc Capital Markets Todd C. Fowler said earnings will possibly grow because of the current shift. Fowler added that demand now seems to be improving as well.

That's good news for the trucking industry and the overall economy, because when the trucking industry shows improving demand, it means more manufacturers are making goods and more retailers are ordering them. Trucks haul everything from small consumer goods like toys and handbags to the biggest industrial products like construction equipment.

Fowler said industry volumes are improving this quarter beyond his initial expectations, as more retailers stock store shelves on encouragement from a better-than-expected holiday season.

Aside from retail restocking, Fowler said truckers are seeing strength in shipments of basic materials like paper, chemicals and plastic as well as industrial goods. Housing and automotive segments still remain generally weak, he said.

Adding to the spur in demand are reports of fleet downsizing, which is good news for remaining truckers because it reduces competition for freight.

Fowler said some of his contacts are reporting that truck supply could come into balance with demand as early as next quarter. Trucking demand hasn't outpaced supply in over three years, when the first signs of a recession surfaced.

Among trucking company stocks, Werner Enterprises Inc. gained 22 cents to $22, while JB Hunt Transport Services Inc. added 23 cents to $34.44. Martin Transport Ltd. rose 2 cents to $18.22, and Knight Transportation Inc. lost a penny to $19.43.