“I remain concerned about the high level of inventories throughout the supply chain,” association’s chief economist warned in a statement to the media last month. “The total business-to-inventory sales ratio is at the highest level in over a decade, excluding the Great Recession period. This will have a negative impact on truck freight volumes over the next few months at least.”
Meanwhile, a stubbornly low energy prices may help the transportation industry cut down on costs.
“Recently declining fuel prices only have a short-term impact on transportation firms,” Morningstar analyst Robert Goldsborough said in a note. “Most firms use fuel surcharge programs to pass through changes in fuel prices. In the short run, firms enjoy a margin benefit for several quarters from rapid fuel price declines because of the time lag in adjusting surcharges to shippers.”
SPDR S&P Transportation ETF
Max Chen contributed to this article.