Truckers, Railroads Slashed Jobs in June

[kscarbel2]

The Wall Street Journal  /  July 8, 2016

Trucking companies cut payrolls by 6,300 jobs amid tepid shipping demand, excess capacity

Transportation companies stayed out of the U.S. employment surge in June, as trucking and rail operators slashed thousands of jobs, the U.S. Labor Department said Friday.

Trucking companies cut 6,300 jobs last month, the biggest month-to-month reduction so far this year in a business that has been scaling back capacity amid tepid demand and declining pricing leverage. Several of the nation’s largest carriers have warned of lower second-quarter profits while new heavy-duty truck orders have reached their lowest point in years.

Freight rail operators, hit by steep declines in energy shipments, continued to cut jobs with 1,600 fewer jobs in June. Railroads have cut their employment rolls by 29,600 jobs in the past 12 months.

Hiring by warehousing and storage companies remained strong, however, with 4,700 new jobs in June, extending steady growth for a total expansion of 54,600 jobs in the last year. Courier and messenger companies added 1,300 jobs in their fourth consecutive month of growth.

Both sectors support e-commerce fulfillment and benefit from the continuing growth of online shopping.

U.S. payrolls in total rose by 287,000 jobs in June, surpassing economists’ expectations and calming fears of an economic slowdown. Analysts say job gains across most other sectors may be a good sign for trucking companies, but not a great one because most new jobs were in the service sector.

Employment in goods-producing industries increased by 9,000 jobs, the Labor Department’s Bureau of Labor Statistics said, after declining in May.

The jobs report and other economic indicators give reason to be “cautiously optimistic,” said Rosalyn Wilson, founder and president of supply chain consultancy FreightMatters. But, she said, most gains “were in the service sector as opposed to being in manufacturing or construction,” and while consumer spending is up, hospitality and retail accounted for much of the growth.

“As far as benefit to the transportation industry, I don’t see a lot going on that helps them,” Ms. Wilson said.

The overall transportation and logistics sector lost 9,400 jobs from May to June, with trucking accounting for the steepest cutbacks. Transit and passenger ground transportation operators cut employment by 6,000 jobs.

Manufacturers, which typically have a strong impact on trucking demand, grew by 14,000 jobs in June, while adjusted figures show 16,000 cuts a month earlier, reflecting recent growth in manufacturing activity. But the sector is still down 42,000 jobs since the beginning of the year, and 29,000 jobs since last June.

“This month’s job figures come as a mild relief after May’s dismal numbers. But while the overall economy grew, manufacturing and import-sensitive sectors in particular are still lagging behind,” said Scott Paul, president of the Alliance for American Manufacturing industry group.

“Steel and other industries in the manufacturing sector continue to feel the effects of global overcapacity, exports are being squeezed by the strong dollar, and last month’s Brexit will only increase these pressures,” he said.

[TeamsterGrrrl]

I suspect a lot of this is due to reduced drilling activity, oil transport shifting from rail to pipeline, the shift from coal moved by rail for power production to natural gas by pipeline and increased production from renewables. The rail line near me used to see several unit trains a day of frack sand, coal, and oil as well as grain. Now I'm seeing maybe one unit trail of oil a day, less than usual coal trains, and most of the frack sand cars are parked MT on seldom used short lines. There has been an increase of "loose car" business with several "merchandise" trains a day with mixed consists of boxcars, tank cars, lumber, and steel and scrap on flatcars and gondolas. I suspect a lot of this "loose car" business was pushed from rail to truck during the U.S. energy boom when oil unit trains darn near monopolized the tracks, and these truckload and carload sized shipments have returned to the rails now that there's less congestion.