Landstar System Inc., reported its share of lower revenue and income numbers in its third-quarter earnings statement, but the nation’s largest owner-operator carrier also sees a turnaround taking shape.

The company earned $20 million from revenue of $501 million in the quarter that ended. Sept. 30. Comparable net income a year ago was $33 million from revenue of $733  million.

The good news/bad news, from Henry Gerkens, president and CEO: “Notable 2009 third-quarter over 2008 third-quarter revenue declines continued to be generated from the U.S. Department of Defense, as well as with respect to our substitute line-haul service offering. On a positive note, revenue generated from the automotive sector began to improve for the first time in a couple of years.”

A separate report this week confirmed the strong numbers on auto shipments. Production of cars and light trucks in North America during September reached the highest level since October 2008, said CSM Worldwide, an automotive industry analyst firm.

For overall business, Gerkens also noted a slowing of the decline in number of hauls. From 2008 to 2009, that measurement dropped 16 percent from second quarter to second quarter, but only 11 percent over the third quarters.

“I see a gradually improving overall freight environment, and I believe that the worst is over,” he said.

— Max Heine

“The economy has bottomed out, but it is going to be slow going in the months ahead.” That was the consensus of speakers at this week’s annual management conference of the American Trucking Associations, in Las Vegas, says ATA Chief Economist Bob Costello in his weekly newsletter.

One of those speakers, Sara Johnson of HIS Global Insight, predicts a contraction of  2.5 percent this year, followed by an increase of 2.0 percent in 2010 and then a normal 3.0 level in 2011.

Costello told the conference of a record reduction in freight volumes over the last year. “Unfortunately, the historical reduction in volumes was surpassed by an even larger drop in revenues,” he writes. “Still, most sectors in trucking appear to have bottomed out.”

He also cited “a record reduction in capacity,” which should end up as good news for owner-operators (and fleets) who can hold out until demand for their services returns: “While this reduction has been masked by an even larger drop in demand for trucking services, it means that volumes don’t have to return to pre-recession levels before capacity tightens significantly.”

And in a separate report, some other positive news. Class 8 orders for major North American truck makers totaled 10,817 units in September, the fourth consecutive month that orders have shown a month-over-month increase, according to preliminary data from FTR Associates, a consulting firm. Year-to-date orders through September are 5.2 percent ahead of the same period in 2008, reflecting the first year-over-year increase since June 2008.

 — Max Heine

More good news for manufacturing. A month ago, Institute for Supply Management data showed that manufacturing grew in August, for the first time since January 2008. ISM reported today that September gave an encore performance.

“While the rate of growth moderated slightly when compared to August, the recovery broadened as the number of industries reporting growth increased from 11 to 13,” says ISM’s Norbert J. Ore. “Both new orders and production are growing, but at a slower rate when compared to August.”

Those 13 growing sectors, listed in order: wood products; paper products; apparel, leather and allied products; transportation equipment; textile mills; printing and related support activities; petroleum and coal products; electrical equipment, appliances and components; fabricated metal products; chemical products; computer and electronic products; miscellaneous manufacturing; and food, beverage and tobacco products.

The four industries reporting contraction in September are: primary metals; furniture and related products; plastics and rubber products; and machinery.

ISM’s index was 52.6 for September, following a 52.9 in August. Any level over 50 indicates growth. The Associated Press reported that analysts polled by Thomson Reuters had expected a 54 for September.

— Max Heine

Lots of good news for trucking in today’s report from the Institute for Supply Management.

Economic activity in manufacturing expanded in August, following 18 consecutive months of contraction, according to the nation’s supply executives polled for the latest Manufacturing ISM Report on Business. The August numbers also show the overall economy grew for the fourth consecutive month.

“The year-and-a-half decline in manufacturing output has come to an end, as 11 of 18 manufacturing industries are reporting growth when comparing August to July,” says Norbert Ore of ISM. “While this is certainly a positive occurrence, we have to keep in mind that it is the beginning of a new cycle and that all industries are not yet participating in the growth.”

Those hot 11 sectors are, in order: Textile Mills; Apparel, Leather & Allied Products; Paper Products; Miscellaneous Manufacturing; Printing & Related Support Activities; Computer & Electronic Products; Transportation Equipment; Nonmetallic Mineral Products; Electrical Equipment, Appliances & Components; Fabricated Metal Products; and Chemical Products.

The six industries reporting contraction are: Primary Metals; Plastics & Rubber Products; Furniture & Related Products; Wood Products; Food, Beverage & Tobacco Products; and Machinery.

“The August index of 52.9 percent is the highest since June 2007,” Ore says of the PMI (Purchasing Managers Index). “The 4 percentage point increase was driven by significant strength in the New Orders Index, which is up 9.6 points to 64.9 percent, the highest since December 2004. The growth appears sustainable in the short term, as inventories have been reduced for 40 consecutive months and supply chains will have to re-stock to meet this new demand.”

Ore also notes that if the PMI for August (52.9 percent) “is annualized, it corresponds to a 3.7 percent increase in real GDP annually.”

 — Max Heine

Borrowing money isn’t the best thing for an owner-operator to do in a down economy like this. But if you must – or plan to do so as soon as the recovery becomes more evident – it’s good to know how the market is changing.

Small-business lending was dead in the water last year as the credit market collapsed, but CNNMoney.com reports that it’s “managed to heal itself” without help from the federal stimulus funding.

“Figuring out how to revive the secondary market has been a priority for the Small Business Administration and the Treasury Department. The government set aside billions to invest, vastly eclipsing the money earmarked for other small business stimulus efforts. But while government agencies struggled to get their programs up and running, the market came back to life on its own,” says the website.

SBA has been offering new money through its America’s Recovery Capital this year, but owner-operators keep running into roadblocks when they try to borrow, reports the Owner-Operator Independent Drivers Association.

 — Max Heine

Industrial production increased by a half-percent in July, the Federal Reserve announced today. While housing and other indicators with relevance to truck freight have shown twitches of life in recent months, this marked the first monthly increase in this measurement since December 2007 (not counting a hurricane-related rebound in October 2008).

The manufacturing component of the index rose 1.0 percent in July. This was mostly due to a tax-revived auto industry, which saw vehicle assemblies jump from 4.1 million units in June to 5.9 million in July (annualized rates).

Here’s the entire report, which covers other segments, as well.

— Max Heine

 

 If you’ve caught the business news in recent days, you know there have been some positive signs. Home prices and sales, employment and other indicators are looking better, possibly meaning a bottoming out of the downturn.

But when it comes to small business and credit, it’s still a mess, reports CNNMoney.com: “Bank lending is down, credit card interest rates are up, and the country’s largest small business lender, CIT Group … is hanging by a thread.” Not good news for owner-operators, who even in good times often rely too much on credit, and many of whom struggle with trying to escape a bad credit rating.

The article reviews President Obama’s promises and programs intended to help small business survive the recession, such as passage of the credit card reform bill and increased lending by the Small Business Administration.

— Max Heine