(Dow Jones Newswries distributed the following article on October 22.)
NEW YORK — For the first time since the economy began slowing three years ago, many of the country’s largest transportation companies are seeing signs of a broad-based recovery that appears to have staying power, Wednesday’s Wall Street Journal reported.
The turnaround is coming in sectors that handle the vast bulk of goods transported domestically: railroads, trucking and package delivery. Their performance is considered a leading indicator of future economic growth, because many of the items they carry are used as raw materials in industrial production and for replenishing inventories. The companies, which closely monitor their biggest customers’ own future expectations, say they are seeing increased demand across a broad swath of industries, from manufacturing and chemicals to retailing and lumber.
United Parcel Service Inc. (UPS, news), which carries roughly 5% of U.S. economic output at any given time, Tuesday said it expects domestic shipment volume to accelerate during the next few months, including the company’s strongest growth in the important Christmas season since 1999. Burlington Northern Santa Fe Corp. (BNI, news), the second-biggest railroad in North America, posted its third quarterly revenue increase in a row and projected an even-larger percentage gain in the fourth quarter compared with a year earlier. The company is adding locomotives to handle increased volumes.
Yellow Corp. (YELL, news), a leading trucking company expected to report earnings later this week, said it has seen freight demand from manufacturing customers rising since July. This was followed by an increase in retail shipments in August and last month.
The transportation companies’ experience appears to be supported by broader economic data. The Federal Reserve says manufacturing production has risen in four of the last five months and is up 1.2% since its April low. However, it is still unclear how durable the expansion will be. Production rose for eight straight months beginning in January of 2002, for instance, then faltered.