Indications are that both domestic intermodal loadings and truck freight are weakening in early 2005, according to FTR Associates, Nashville IN.
Truck freight grew a scant 0.4 percent year-over-year in February, which is substantially below the 5-6 percent increases seen in the first half of 2004.
The weakness in truck freight will further impact intermodal loadings as the trucking companies take back some of the freight they were willing to give up to intermodal when their own demand exceeded their capacity.
Conversely, the short-term intermodal outlook has been impacted positively by freight being imported to the United States as the trade deficit, especially with China, balloons.
Even with a slowdown in freight, truck and rail capacity continue to remain tight.
Preliminary estimates show that US tractor capacity in use fell slightly in the first quarter of this year but is still at historically high levels.
With a preliminary reading of 95.7 percent recorded in the first quarter of 2005, tractor capacity has averaged 95.4 percent over the last six quarters.
This is substantially higher than the previous peak seen in the first quarter of 1998 when it posted a reading of 91.2 percent, and significantly higher than its historical average reading of 85 percent, according to the FTR information.
Looking forward, capacity will start to ease throughout the year falling to 90.5 percent by the first quarter of 2006.
This would suggest further pricing pressure on truck rates at least through the end of this year.
Although FTR had forecasted some slowdown in domestic intermodal loadings and truck freight, the combination of high oil prices, weak job growth, and slowing freight growth possibly indicate a fundamental weakness in the domestic economy, FTR forecasts. However, FTR states that it continues to remain optimistic about the economy and expects freight growth to improve as the year moves forward.