Werner’s Leathers sees peak-season prospects shaping up well

Peak season typically begins in August and lasts through late October or even into early November. (Werner Enterprises)

The coming peak shipping season is set to be the best for trucking since the COVID-19 pandemic as retailers are restocking inventories at typical or even higher-than-normal levels, according to Werner Enterprises CEO Derek Leathers.

As a result, the ongoing tightening of capacity in the truckload market due to federal enforcement initiatives is set to intensify.

Retailers are benefiting from greater consumer resiliency than might have been expected, but the chains creating the most consistent demand are discount stores, Werner’s top executive told investors Aug. 11 at the Deutsche Bank Chicago Industrials Summit.

Some 80% of Werner’s truckload transportation fleet is deployed as dedicated contract carriage, with more than 70% of the freight transported by the carrier consisting of retail merchandise, grocery products or consumer goods, according to the company.

Werner ranks No. 19 on Transport Topics’ Top 100 list of the largest for-hire carriers in North America and No. 8 in the truckload/dedicated segment of the freight market.

“Obviously, it’s early in peak-season discussions, but what we’re hearing, what we’re seeing leads us to believe that we’ll be back to more normal off the lines peak kind of activity this fall,” Leathers said.

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Leathers 

Peak season typically begins in August and lasts through late October or even into early November as retailers restock shelves ahead of the late-summer return to school and then build out their inventories ahead of the holiday rush.

“If you go back, you’d have to go back to like the COVID years and even prior to see the kind of lift that’s expected during peak season,” Leathers said.

Retailers are adapting to consumer behavior, the executive said, noting that ongoing increases in prices were leading customers to be more frugal and a little more thoughtful with their spending.

“We’re heavily exposed into discount retail. We’re heavily exposed to folks that are catering to that sort of more thoughtful, more prudent consumer. And so, we’re pretty optimistic as we look into the peak,” Leathers said.

Werner expects to be able to meet the complex needs of customers in the retail sector more easily now, too, following the acquisition of FirstFleet in January, company executives told investors, in the most recent example of a long-term transition away from one-way freight.

Murfreesboro, Tenn.-based FirstFleet added about 2,400 tractors, 11,000 trailers and 37 properties near 130 customer sites around the U.S. to Werner’s portfolio.

Even indications that the pace of rate increases is slowing and inflation remains a headwind are not dulling Werner’s optimism.

July is historically a slow month for carriers, typically the second-weakest month for the trucking industry, but rejection rates were still around 14%, according to Leathers, with a rate above 10% indicating a very tight market.

“As we get closer into the fall peak, it’s just going to get tighter from here. So, there’s no concerns, if you will, from our perspective about what some of these little snippets of news that we’ve seen in July,” Leathers said.