[Home]  [Headlines]  [Latest Articles]  [Latest Comments]  [Post]  [Mail]  [Sign-in]  [Setup]  [Help]  [Register] 

SHOCK REPORT: St. Louis Bomb Plot Fails Because of Maxed Out EBT Card

Happy Thanksgiving Day Liberty Lovers

Thank a White Male

Rare glimpse into Hillary Clinton’s paid speaking career

A Novel Theory of Global Warning On Venus

Cops: #MichaelBrown Stepfather Inciting #Ferguson Race Riot is Blood Gangbanger

Media Blackout: Possible Grand Jury Witness Murdered in Ferguson

OBAMA LECTURES AMERICA ABOUT THE JUSTIFIED ANGER TOWARDS LAW ENFORCEMENT IN MINORITY COMMUNITIES

Gallup: Obama Approval Plunges with Working-Class Whites to 27 Percent

Oath Keepers Guarding Businesses in Ferguson, Missouri: Calling on Volunteers to Assist

Beach Boys Latest Hit

The ACA Exchanges Can Be Fixed, But They Were Meant to be Broken

Brown Shooting - Re Wilson's Initial Interview v Autopsy

Transcripts show #DarrenWilson lied to the grand jury

Lawrence O’Donnell - Why did McCulloch pin so much on unreliable ‘Witness #10'??

Ferguson Protesters Looted a Freaking Dollar Store

How Coincidence (Non-Conspiracy) Theorists Are Playing Key Role in Destruction of America

With Everyone Focused on Ferguson, Obama Quietly Passing 3,400 New Regulations Before Thanksgiving

What Obama’s Ferguson Sermon Left Out

Ferguson Fiasco Exposes Ruling Class’s Relentless Anti-White Agenda

Moral Befuddlement in Ferguson

In Year Two, Obamacare’s Off to Another Bad Start

Obamacare offers firms $3,000 incentive to hire illegals over native-born workers

Car plows through protesters during Ferguson rally in south Minneapolis

**Media Shock**: New York Times Publishes Darren Wilson’s Address Info

MOST BUSINESSES DESTROYED IN FERGUSON MINORITY OWNED

Judge Greenlights Lawsuit Against Guest-Worker Program Expanded by Executive Amnesty

CNN AIRS CLIP OF MICHAEL BROWN’S STEPDAD SHOUTING 'BURN THIS BITCH DOWN'

Missouri Lt. Gov. Rips Gov. Nixon Over Lack of National Guard Presence in Ferguson

Michael Brown shooting: What Darren Wilson told the Ferguson grand jury

Chuck Schumer: Passing Obamacare in 2010 Was a Mistake

Yep! They all came together and the result was seen last night.

SECRETARY OF DEFENSE CHUCK HAGEL RESIGNS

ST. LOUIS POLICE OFFICER DOWN! U-City Cop Shot – Condition Unknown

Libya, Isis, Rioting In Kiev: Hagel Didn’t Start the Fire

REPORTS: FERGUSON GRAND JURY HAS REACHED DECISION

Ferguson Protesters Vandalize St. Louis City Landmark

‘Man Spreaders,’ There’s No Excuse for Not Closing Your Legs on the Subway

Four words that could deep-six Obamacare

Brat: 'Not one thin dime' for Obama's immigration plan

How Hollywood Accounting Can Make a $450 Million Movie 'Unprofitable'

Impeach President Obama—Why When Where and How

Georgia Man Shoots & Kills Man Who Mistakenly Pulled Into Driveway; Misdemeanor, $500 Fine (Castle Doctrine)

The Benghazi Brief – “Operation Zero Footprint” – What We Know About The Benghazi Mission, And Subsequent Attack

Ferguson Protests Grow Larger: ‘We Don’t Give a F--- about Your Laws’

How $10,000 In The Bank In 2008 Lost Over $7000 Of Wealth by 2013

The Use and Abuse of Executive Orders and Other Presidential Directives

BREAKING REPORT: DOJ Is Threatening #Ferguson Prosecutor With Bias Order Over No Indictment

‘Now, That’s What I Call a Friday News Dump’: Final Report Released After Two-Year Investigation Into Benghazi

Security Experts: What to do if protesters surround your car.


Status: Not Logged In; Sign In

Business
See other Business Articles

Title: Trucker Shares Seen Ready to Rally in U.S. With Housing Starts Rebounding
Source: Bloomberg
URL Source: http://www.bloomberg.com/news/2012- ... -u-s-with-housing-rebound.html
Published: May 22, 2012
Author: Anna-Louise Jackson and Anthony Feld
Post Date: 2012-05-22 11:19:47 by Brian S
Keywords: None
Views: 173

Trucking companies may need to put more vehicles on the road to support a recovery in U.S. residential construction, which might send their shares higher.

Housing starts rose 2.6 percent to a 717,000 annual rate in April, beating the 685,000 median estimate of 80 economists surveyed by Bloomberg News. Construction has improved 50 percent from a low of 478,000 reached in April 2009, during the 18-month recession that ended two months later, based on data from the Commerce Department.

“All of the freight required to build a new home has a very positive impact on trucking activity,” said Todd Fowler, an analyst in Cleveland at KeyBanc Capital Markets Inc., the investment banking arm of KeyCorp. As a rule of thumb, each new residence requires between five and eight truckloads to transport supplies such as lumber, roofing materials and interior furnishings, he said.

Purchases of new homes probably rose in April to a 337,000 pace, up 2.7 percent from the prior month, according to the median estimate in a Bloomberg News survey of 72 economists. Sales data is to be released by the Census Bureau tomorrow.

As construction improves further, trucking companies will need to add capacity to meet the additional demand, said Bob Costello, chief economist for the American Trucking Associations in Arlington, Virginia. This will “without a doubt” be a benefit to the industry, particularly in the so-called truckload business, he said.

An index of the loads carried by the truckload segment, a proxy for industry volume, has risen 14 percent to 103.9 in March from the recession period low of 91 in January 2009, based on a survey of the trucking association’s members. Still, that’s almost 13 percent below the May 2008 level, the data show.

Carrier-Size Expansion

If starts were to remain above 750,000 for a 12-month period, trucking companies would need to add about 4,000 trucks to the road, according to Fowler’s calculations. To meet this demand, a fleet the size of those run by a top-10 carrier, such as Knight Transportation Inc. (KNX), would be required, he said.

There’s “light at the end of the tunnel” for homebuilders as inventories remain lean and demand is “forming a bottom” in most regions, said Sal Guatieri, a senior economist in Toronto at BMO Capital Markets. Housing starts have averaged a 713,500 annualized pace this year and may improve to average 740,000 in 2013, he estimates.

Federal Reserve policy makers echoed this sentiment, noting that sales and starts “suggested some upward movement,” though “most participants anticipated that the housing sector was likely to recover only slowly over time,” according to the minutes of their April meeting released May 16.

Flatbeds First

Operators of flatbeds -- trailers without sides that transport lumber and large materials -- are typically the first to experience more residence-related business as homebuilding expands, said Charles Clowdis, managing director of transportation advisory services at IHS Global Insight in Lexington, Massachusetts. As a homeowner gets ready to move in, dry van carriers carry more freight, such as furnishings and appliances, he said.

Landstar System Inc. (LSTR) is among publicly traded trucking companies with exposure to the flatbed business. The Jacksonville, Florida-based carrier had 3,424 flatbed trailers as of Dec. 31, according to its annual report. This compares with 3,437 at the end of 2010.

Truckload carriers including Werner Enterprises Inc. (WERN) and Celadon Group Inc. (CGI), which transport goods to retailers such as Home Depot Inc. (HD) and Lowe’s Cos. (LOW), probably will benefit from a better housing market, said Fowler, who maintains “buy” recommendations on these companies.

Trucking Comparisons

The Bloomberg U.S. Truckload Trucking Index -- which includes Indianapolis, Indiana-based Celadon and Werner, based in Omaha, Nebraska -- has risen 8.4 percent this year, compared with a 3.2 percent increase for the Russell 2000 Index. For the past 12 months it underperformed the Russell.

The recovery in trucking volumes since the recession ended hasn’t been led by housing, so “an incremental improvement in housing starts will be a net positive for our industry,” Derek Leathers, president of Werner, said in a phone interview. Activity will pick up because the company hauls freight for retailers that sell housing-related goods, he said.

The trucking index’s rebound means “the bleeding has stopped,” according to Jim Stellakis, founder and director of research at New York-based research company Technical Alpha. If it begins trading higher than its peaks relative to the Russell 2000, which came in January 2012 and August 2011, it would indicate investors are becoming more optimistic about the industry, he said.

Shares of trucking operators haven’t outperformed the market during the past year because freight activity has been “good, but not great,” Fowler said. “If you believe the housing market is getting better, there should be an additional improvement” in demand and the rates charged, which may help stock performance, he said.

Not Turning

Still, “housing really hasn’t turned” from the perspective of Landstar, Chief Financial Officer James Gattoni said on an April 26 conference call. Arkansas Best Corp. (ABFS) also is awaiting a comeback in the industry, President and Chief Executive Officer Judy McReynolds said at a March 14 conference in New York hosted by JPMorgan Chase & Co.

“We are looking forward to the time whenever housing even comes back to something close to normal,” McReynolds said. “It is a sizable factor,” she said, for both truckload and so- called less-than-truckload, the Fort Smith, Arkansas-based carrier’s primary business.

Should new home starts return to a 10-year average of 1.3 million on an annualized basis, it would effectively double the number of trucks required to haul housing-related freight from current levels, Fowler estimated. Even so, the industry is in equilibrium, and a stronger housing market could make it imbalanced because of a shortage of available drivers, he said.

Employment Return

An improvement still may be a few years away, though “home affordability has rarely been better, at least in the last four decades,” Guatieri said. That’s because employment is “moderately coming back,” and prices remain low, bringing first-time buyers into the market, he said.

The jobless rate fell to a three-year low of 8.1 percent in April, down from a 27-year high of 10 percent in October 2009, Bureau of Labor Statistics data show. Home prices were down about 34 percent in the 2011 fourth quarter from their 2006 peak, according to the S&P/Case-Shiller index of property values.

Though the truckload segment probably will be the biggest beneficiary -- with carriers hauling everything from roofing to carpeting -- more construction could have a ripple effect throughout trucking, Fowler said.

“It would be a rising-tide environment for all of the carriers.” Subscribe to *Obamanomics On Parade*

Post Comment   Private Reply   Ignore Thread  


[Home]  [Headlines]  [Latest Articles]  [Latest Comments]  [Post]  [Mail]  [Sign-in]  [Setup]  [Help]  [Register] 

Please report web page problems, questions and comments to webmaster@libertysflame.com