Bullish commentary from the trucking industry and positive intraquarter updates from carriers have confirmed what the data has been showing for several weeks now: Third-quarter earnings for trucking companies will be strong and that strength may continue for a while.
While second-quarter results came in ahead of lowered expectations, COVID-19’s impact on demand was evident in most financial reports. After a brief inventory restocking rally in March, trucking demand fell as manufacturing lockouts and municipal shutdown ordinances spread. A bottom formed in April with conditions improving throughout the quarter. The “less bad” trend throughout the second quarter has turned into year-over-year growth in the third quarter as carriers are seeing peak-type loads ahead of peak season.
What the data was saying all along has been confirmed as management teams from the publicly traded carriers have begun to vocalize the improvement and analysts have raced to up their earnings estimates for the current quarter and beyond.
Truck demand materially higher
Outbound tender volumes (SONAR: OTVI.USA) inflected positively year-over-year in mid-May as manufacturing, notably in the auto sector, came back online. The year-over-year growth in volumes accelerated throughout the bulk of the third quarter, cooling only for the Labor Day holiday, which occurred five days later this year than last.
At a recent investor conference, representatives from various carrier management teams provided anecdotes on the relative demand outperformance. Management from J.B. Hunt Transport Services (NASDAQ: JBHT) said they have seen incremental demand increases in each of the past six weeks. Schneider National’s (NYSE: SNDR) team indicated that a 10% to 15%