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Voters should wake up to the issue of war versus peace.

Election Potpourri

Heather MacDonald on Black Lives Matter: Does The Truth Matter?

FBI No. 2 pressured to resign over McAuliffe donations to wife

WIKILEAKS - [Podesta] How bad is her head? [Huma] She's going to stick to notes a little closer this am, still not perfect in her head.

Exclusive investigation: Donald Trump faces foreign donor fundraising scandal (Jesse Benton, Eric Beach)

Business among Salt Lake City’s homeless: corpses, tents and maybe a store exodus

BOMBSHELL: The same exact day that Cheryl Mills told John Podesta they needed to 'clean up' the email scandal...

WIKILEAKS - Podesta - "Speaking of transparency, our friends Kendall, Cheryl and Phillipe sure weren't forthcoming on the facts here"

WIKILEAKS - "HRC does not want to be in the position of defending ObamaCare during huge premium increases..."

WIKILEAKS - The Executive Order sausage factory

WIKILEAKS - we need to clean this up - he [POTUS] has emails from her - they do not say state.gov

White House dodges on whether Obama will leave country under President Trump

The Trump’s Sex And Cocaine Parties: 5 Fast Facts You Need To Know

Quotes to remember on election day

Trump hosted cocaine-fueled parties with underage girls

Political Conundrums

Obama team kept list of Muslims for top jobs, excluded non-Muslims

'I Want Hillary to Win Badly': Facebook Billionaires Unite to Stop Trump

Early Voting Report: Votes Switched From Trump to Hillary in Texas

comment on “Trump On Miss Universe Pageant Winner.”

Clinton attack featuring Miss Universe was months in the making, email shows (Wikileaks)

WIKILEAKS - [Podesta] they believe the Obama forces flooded the caucuses with ineligible voters. They want to organize lawyers for caucus protection, election protection

WIKILEAKS - [Brent Budowsky] I did not see even one Hillary button or t-shirt from even one student who cared to support the candidate

WIKILEAKS - [atty Erika Rottenberg] none of my friends circle can understand how it was viewed as ok/secure/appropriate to use a private server

Nine bad reasons to vote for Trump

WIKILEAKS: Claire McCaskill: Got some info about the state department IG. You guys should digest and figure out what if anything we can do.

Hillary And The Ducks!

Rigging the Election – Video III: Creamer Confirms Hillary Clinton Involvement

Miley Cyrus: ‘Kiss My Ashtanga Ass if You Aren’t Voting for Hillary’

Migrant foster mum reveals her horror at discovering ’12-year-old refugee’ in her care is actually a 21-year-old Jihadi

1960s pop singer Bobby Vee dies at age 73

My prayer on 9/11

Nearly 8,000 people in China apply for one job

Lawmakers blast Pentagon over 'clawback' of improper military bonuses

Terry McAuliffe Aided Wife of FBI Official Later Tasked With Clinton Email Probe

Gary Johnson the fag lover hondo loves has 6 newspaper endorsements. Donald Trump has 0 (1, now)

You’ve Got It All Wrong About Donald Trump

No comment: Clinton has 'nothing to say' about Wikileaks email revealing $12M quid pro quo with Morocco's king that an aide said was a 'mess' of her own making

Wikileaks: Clinton Foundation Misled Employees About Results of Internal Audit

Campaign manager: Trump would be willing to do another debate (presumptive loser grasping at straws - do over)

Infant was punched, left in car for 24 hours before parents buried him, police say

American Government Brings In Muslim Man As A Refugee, He Comes Into Texas And Then Begins Planning To Blow Up Malls In Houston

'Rigged' Debates? Questions Arise Again Over Lighted Screen At Hillary's Podium

Muslim Migrant Who Anally Raped 10-Year-Old Boy Has Conviction Overturned: ‘He Didn’t Know The Boy Didn’t Want to be Raped’

Wanted Child Molester Flees Guatemala, Illegally Enters U.S., Now Accused of Molesting At Least 8 American Boys

WIKILEAKS - Re: Draft Statement for HRC for Tues (comment) [initial BBerry/email lies written for HRC]

Trump lands first major newspaper endorsement

WIKILEAKS - Re Tweet from @JoeNBC [Holy Moses, not Doug Band; Eric Braverman (fmr CEO Clinton Foundation)]

Drug stronger than heroin legal in 46 states despite effort to ban

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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: 378

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*

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