Trucking demand remains at or below freight recession levels, says Ken Hoexter

A lot of people consider JB Hunt is possibly a bellwether of consumer demand. Their big business is container shipping. That’s how most consumer products come into the country and get shipped around. That came in 8% below estimates. Do you agree with that idea that this is a read on consumer spending and consumer demand? Great. Good morning, Frank. Thanks for having me. You know, look I I think JB Hunt which moves most of its products as you mentioned in boxes but domestic containers. So really is a good read on the domestic economy. As as you talk about intermodal, really the the key here was was volumes were flat, pricing was down. This is just part of what we’ve been talking about, about this elongated freight recession that we’ve been in probably about 1718 months now. You and I have talked about this before in our truck ship or survey that we do every two weeks just demand has remained at or below freight recession levels. Now like I said going back all the way to February of last year. So just the demand remains weak and we’re not seeing it break out and that’s exemplified what’s going on with spot pricing in the market where pricing is remaining really historically low levels. So I agree with you, it’s certainly sending the the picture. But first quarter we expected to be weak and it it certainly was even weaker than expected just given those results. Yeah, I kind of think we’re seeing that in the stock price. JB Hunt shares down more than 6%. So you mentioned some of the weakness in spot pricing and some of the weakness in the trucking market overall. That means prices are going down. Is that a read into what we expect from CSX, a large East Coast rail, because when truck prices are lower, it gives a lot of competition to rail companies. Yeah, certainly that’s it’s a great example. So trucking moves about 70% of all freight tonnage in the US represents about 80% of all dollars spent in the US on transportation. So certainly whatever is going on in the trucking market does spill into other markets. However, the rails for the second quarter in a row now after having LED in some of the early cyclicals and seeing some negative freight volumes are actually posting their second consecutive quarter, a positive volumes year over year. So a little bit different than what we’re seeing in the rails. Certainly what I’m sorry in the trucks, a little bit different than what JB Hunt saw at intermodal where volumes were flat, but here the rails volumes are are slightly up for CSX. That should be a good start. But again you’re right, the the pricing is going to be a a constraint on them particularly for export coal which is a different subset of the market. But export coal is really seeing some weaker global pricing that could impact their overall pricing. Yeah, you know that that rise of of cold demand, especially for export has been something that’s been a big boost for CSX specifically because it works on the East Coast. I want to talk to you about the transports overall. So since that CPI report that came in hotter than expected, transports down about 4 1/2 percent, we often see them as a read on the overall economy. The fact that we’re not getting rate cuts as soon as many people expected, there were some expectations of June. What does that mean for the transports in the second-half of the year? Yeah, it’s certainly sending the signal that you need to be more cautious, right. We’ve talked about, as I mentioned before, this elongated freight recession. We’re certainly shippers are seeing, struggling to see an outlook that is improving at a great extent. We’ve been talking about it, it hitting this 54 level, which is the average of the last three freight recessions we saw in 2012, 20/15/2019. It’s struggling to break out and so shippers aren’t seeing a brighter outlook which is constraining that that demand. As you mentioned transports being early cyclical, it’s going to constrain their ability to really break out until we see that demand level start to take off. You know we got to hit on one part of the transports. We don’t generally lump into the transports, the airlines, United Airlines out with a forecast that’s really got investors pretty excited. What do you make of that? Yeah, I beg to to plead the fit there. My my counterpart follows the airline. So I’ll leave it to to him to to espouse on on the airline volumes. But I think what you’re seeing again just is the outlook for demand from shippers on the freight side remains fairly weak and I think that’s really what’s controlling what your outlook overall on, on the transports kind of is trending towards.