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Refrigerated loadings drop 0.5% in June

After struggling during the second half of 2011 and into the early portion of 2012, Refrigerated loadings saw a resurgence in April but have since dropped. Refrigerated volumes fell 0.5% in June to 4.207 million. Volumes in the second quarter were revised significantly higher, with all of the gain occurring in April. Once again, this helped to improve the year-over-year comparison and it actually showed a positive reading for 2 months before dropping again in June, falling 0.8%. Year ago comparisons will get significantly easier starting next month.

Recent history
Freight volumes were flat in 2009 after growing 4.3% in 2008 – one of the only sectors to show growth in 2008. Loadings were also flat for full year 2010, up just 0.1%. Refrigerated freight fell during every quarter of 2009 and then rose during every quarter of 2010 – leading to two consecutive years of no growth despite substantial quarterly movements. Growth was also low in 2011, up just 1.6%. This is very typical of this market segment. 2011 actually saw volumes decline quarter-over-quarter for the whole year.
There was a small uptick in volumes during Q1, up just 0.2%. It was the first quarter-over-quarter gain since 2010. That was followed by a strong increase of 1.9% in Q2 – the largest increase since a 3.1% quarter-over-quarter gain in Q4 of 2010. Prior to April and May, Refrigerated loadings had remained solidly negative since last October on a year-over-year basis.

Outlook
The Q2 increase will help the refrigerated segment achieve its historical average of 1% growth in 2012, rather than the flat market we had forecast last month. Still, this market is well below the industry average and will stay that way during this recovery. Positive year-over-year comparisons should return in July as we overlap a period of weakness that started last July and lasted until April’s surge. 2012 is now expected to grow 0.7%, followed by growth of 2.3% in both 2013 and 2014.

Analysis
The April surge helped pull year-over-year comparisons positive for 2 months. An uncharacteristically strong surge in food production (as indicated by the Federal Reserves’ Industrial Production data) led to the upward revision for Q2.
Despite the uptick refrigerated volumes continue to cycle less than the total market. This performance is completely normal. We expect it to continue. This is a more non-cyclical market segment and generally stays within a narrow band of +/- 5%. People always have to eat. We are now at the negative portion of the refrigerated cycle where its very low cyclical pattern keeps growth below industry averages. The same modest numbers look very good during a downturn when the other segments fall sharply.

A slew of new Federal food regulations expected sometime in 2012 could increase the requirements for temperature-controlled trucking.

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