Speaking here Sept. 7 at the Dahlman Rose investor conference, that message was delivered by executives from Wal-Mart Stores Inc., Owens Corning and Formosa Plastics Corp. U.S.A.
“We are guardedly optimistic going into the second half of the year — we are set to have a pretty good fall season,” said Kelly Abney, Wal-Mart’s vice president of international logistics and transportation.
He pointed to steady sales of grocery items and a “resilient” back-to-school shopping season as positive indicators.
Richard Lissa, director of logistics management for Formosa Plastics, used the “guardedly optimistic” characterization, and Wayne Johnson, manager of global carrier relations for Owens Corning, said demand for roofing and other products except for construction materials was strong.
Their comments were made against the backdrop of continued declines in financial markets and expectations of economists that third-quarter economic growth won’t reach 2%.
“We think 2011 will be an OK year,” Lissa said, though he expects second-half demand may dip for plastic products such as pipe from a “very strong” first half for the company, based in Taiwan. Exports will be particularly strong, he added.
Johnson said demand for his company’s roofing materials and composites such as floor mats were both doing “very, very well.”
Exports to countries such as Korea and Turkey also have boosted de-mand for roofing materials. Johnson even had a positive take on products related to new home construction — such as insulation — though that market remains weak.
Johnson said he believes the bottom of the housing market finally has been reached, and new construction will be higher than the 688,000 expected by forecasters.
Rail carriers who also presented at the meeting echoed the shippers’ views about the general business climate and peak season.
CSX Corp., Norfolk Southern Corp. and Union Pacific Corp., the three biggest publicly owned railroads, all said they had seen some freight volume growth and no sign yet of any broad decline in demand.
At smaller railroad Kansas City Southern, Chief Financial Officer Michael Upchurch echoed that view.
“We are not seeing any particular softness that will give us any concern,” he said, because last month the railroad had its highest August freight levels in the past five years.
There also was broad agreement among carriers and shippers on the outlook for a muted fall peak shipping season — or lack thereof.
“Peak season won’t happen this year, we believe,” Johnson said, referring to industrywide conditions.
“We are anticipating a more compressed peak season in September and October,” said Union Pacific CFO Robert Knight.
However, Knight added a note of caution, saying “I can’t predict exactly how peak season is going to play out this year.”
“The fall peak we have traditionally described will be more of a mound,” said Donald Seale, executive vice president at Norfolk Southern.
Abney said one reason the traditional fall peak is flattening out is a change in customers’ buying habits. Purchases now are being made closer to events such as holidays, which has prompted Wal-Mart to alter its supply pattern to stores.
The change, Abney explained, is giving the retailer new opportunities to smooth out the pace of second-half shipments into the United States and from distribution centers to stores.
Traditionally, Abney noted, October has been the peak month for freight volume.
While the three shipper executives whose companies’ combined 2010 sales were about $500 billion had some optimism about demand, the trucking capacity situation was a concern for specialized bulk equipment.
“On the bulk side, capacity is very, very tight,” Johnson said, citing the high demand for equipment to move sand used in natural gas and oil drilling. Railcars to haul those products are in short supply as well, he added.
Lissa said Formosa also has seen some tightness in the specialized bulk equipment sector.
Dry van capacity generally has not been an issue, the three shippers said.
Abney noted that Wal-Mart’s only capacity tightness in the dry van sector came during holiday periods.
The company can soften the effect of capacity constraints, he added, by turning to Wal-Mart’s private carrier, whose equipment makes it larger than all but two other trucking companies.