Fed Notes Trucking Concerns in Latest Report

Click here to write a Letter to the Editor.

usiness activity continued to expand from late February through early April, but demand for trucking services eased somewhat as firms continued to pass higher fuel costs on to customers, the Federal Reserve said in its latest “Beige Book” report issued Wednesday.

The Fed’s manufacturing updates were largely positive, with 11 of 12 districts indicating that production or orders were rising.

But "reports from many districts suggested that upward price pressures have strengthened," the report stated. Much of the pressure has come from energy costs, although contacts also cited the lower dollar and rising costs of building materials.

Philadelphia manufacturers reported rises in orders and shipments and said they expect increases in shipments and orders in the next six months. The district reported increased trucking activity despite higher freight rates, fuel, equipment and labor costs, the Fed said.

The Chicago district characterized activity as continuing at solid levels with the exception of weakness in light-vehicle production.

Strong demand in Chicago has strained capacity, with shortages of axles, tires, and roller bearings holding back production. One industry analyst thought customers may be delaying ordering because backlogs were so high, the Fed said.

Cleveland began to show signs of weaker activity, the Beige Book said. While business conditions continued to be strong for shipping firms, for the first time in at least a year some contacts suggested activity was starting to soften due to rising fuel costs, which increasingly concerned shippers.

Outside of surcharges, freight transportation rates in Cleveland have remained steady, with contacts reporting their firms attempting to attract qualified drivers. Firms also continue to add trucks to their fleets, the report said.

n Richmond, services companies generally reported modest increases in revenues, though utilities and trucking firms experienced some softening in demand as they pushed through higher fuel costs, the report said.

The Fed said that in the Atlanta and Kansas City districts, the availability of qualified drivers remained limited.

he Dallas district reported trucking demand has leveled off but remained above last year's levels, while railroads and airlines reported strong demand.