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This story appears in the Nov. 17 print edition of Transport Topics.

Tight truckload capacity is driving up rates and boosting business for less-than-truckload carriers, with demand from shippers providing a lift that positions trucking for continued growth, industry analysts said.

“When I see LTL doing well, I like that,” Bob Costello, chief economist for American Trucking Associations, said in an interview with Transport Topics. “It tells me that shippers are saying they have to get their goods to market and are shipping some things via LTL that, a year ago, they may have waited to get a full truckload out of. I think, in some cases, they are moving things into the LTL sector that they would not traditionally do.”

The LTL sector recorded a healthy gain in September, jumping 6.8% from the same month last year and rising 0.9% from August, according to ATA’s most recent trucking activity report, released late last month. While truckloads dipped 1.7% in September from August, they rose 1.8% year-over-year, the report said.

“The third quarter was solid,” Costello said. “Year-over-year growth continued, and [the] dry van [truckload segment] hadn’t been seeing year-over-year growth

for a long time during this recovery. That was the laggard, and it’s back.”

Full truckload measures single loaded runs, while LTL shipments measure the number of individual shipments on a truck’s payload, which often include multiple movements from various shippers.

Across the industry, trucking companies are reporting a strong business environment, said Lee Klaskow, senior transportation and logistics analyst with Bloomberg Intelligence in New York.

“A lot of the carriers talked in their third-quarter earnings reports about their length of haul increasing and getting better utilization rates out of their tractors,” he said. “They’ve seen that pick up in October,” as well, he said.

“You have an improving economy, higher consumer confidence and lower fuel prices putting more money in peoples’ pockets. That bodes well for future demand,” Klaskow told TT.

“Rates are slowly accelerating, volumes are staying relatively strong — though not accelerating — and capacity is tight,” added Jon Starks, director of transportation analysis for industry analyst FTR. “If you wrap all those together, you’ve got a pretty solid market.”

The group’s trucking conditions index posted a 9.1 reading for September, up from a 6 reading in June. It rose steadily throughout the third quarter, a sign of a growing freight market, as positive numbers indicate strength.

“When we get to a double-digit level, that’s when you’re really in a hot market,” Starks said. “We’re right on the cusp of that now.”

And he added that shipper demand is a key factor for the growth. “The real impact right now is what’s happening on the capacity side, which is translating into [higher] rates for truckers,” he said. “Because the capacity situation is still tight, if there is any surge or tightness like last winter, that will feed back into what’s going on in the rate environment.”

FTR’s report said that after some recent slowdowns in longhaul moves, things had picked back up.

“We did see some downward pressure” in longhaul runs, Starks said. “But they have begun to abate and are moving back up, [while] shorthaul moves tend to be a little more stable.” He added that “the freight environment is really pretty stable right now.”

These measurements differ from ATA’s monthly tonnage reports, which gauge the weight of total truck shipments.

“Tonnage doesn’t always follow loads; you could have one up and the other one down,” Costello said. “That tells you that the part of the industry that did well has high average weights — or you could have the opposite, with tonnage down and loads up, [which] would tell you that dry van did well, because they generally have some of the lower average weights.”