FreightWaves Today | September 16

Craig Fuller (0:35)

Welcome to FreightWaves Today, it is Wednesday. It is my favorite day of the week. It is the Rail, we get the AAR Rail data. We're gonna have Bill Stephens, the editor of Trains Magazine in today. Not in studio, but talk about, give us the update on the rail volumes. It's always an important metric because it tells us what's going on in the, particularly the industrial economy.

Last night, JB. Hunt was at an investment conference, sold off substantially, really talking about some of the challenges. What did you pick up from that whole story, Julie?

Julie van de Kamp (1:07)

Yeah, so I just sort of glanced through the article and basically, I mean, obviously their stock is down 12% and then following that, of course, all the other trucking stocks are down a bit as well. Really, that they're continuing to focus on utilization and yield over adding and they're trying to pick up market share.

Intermodal and dedicated businesses is still strong and that they're seeing demand but the costs are up. Part of that being fuel and that the only place they're really seeing lack of demand was FinalMild.

Craig Fuller (1:37)

Yeah, which is mostly consumer goods. We've talked about it. It does feel like the consumer part of the freight economy is challenged right now.

And so that is something I think is really we're seeing certainly the industrial economy do quite well and we'll hear about that with our rail report but the consumer save the economy is much softer than it has been. In fact, Goldman Sachs had a report that they're starting to see the more affluent parts of the economy slow down spending. And so it does feel like the consumer who has been keeping the freight market alive for years is starting to take a bit of a break. What's interesting though is that travel, particularly discretionary travel, business travel and consumer travel is actually holding up well. The airlines are doing well, experiential. Maybe it's a generation thing. Younger people care less about goods and more about experiences. Any thoughts there?

Julie van de Kamp (2:35)

Maybe or maybe it's still hangover from COVID where people put off those experiences for so long, certainly spent that time buying goods, renovating their homes, doing all of that. Now, people aren't moving, so they're not buying goods for their home.

Craig Fuller (2:50)

But also, if you're a young person in an apartment, you don't have room for stuff.

Julie van de Kamp (2:53)

You don't have anywhere to put stuff. They can't afford to buy a house.

Craig Fuller (2:57)

Yes. If you have discretionary money, what discretionary money you have, I wouldn't say you blow it on experiences, but maybe that's the right term. You're going to spend it on experiences where you get the memories of it. Look, we're in the Instagram economy. Young people, I'm doing this museum in North Georgia, where I was at Chedinger called the Motion Museum, which is the largest.

As if the Smithsonian was to build a history museum, described through transportation. One of the things I've learned about building a museum and experiences, particularly tourism, is that you want to capture something that's Instagrammable. That's what actually drives modern experiences. It's all about the Instagrammable moments. And look, if you can't store stuff because you live in an apartment, a 400-square-foot apartment like my wife did when she was living in Manhattan, you can store memories on a camera. And I think that's maybe why we're seeing money be spent on experiences and not on goods. I mean, that's not good for our business.

It is not. Like freight needs hard goods.

Julie van de Kamp (4:02)

Yeah. We talked a little bit about... We had a great event yesterday in New York focused on new shippers and talked a lot about freight pricing. And you and Zach talked a lot about sort of what we're calling a fragile freight environment, right? Where there's still... It's still as lack of capacity driven. We're still seeing those tender... And I talk about it a little bit in the Center Update today. We're still seeing those 14% tender rejections. We did see a bit of a pickup in volumes, but it's hangover from Labor Day.

Craig Fuller (4:27)

His term on fragility is a little different than I think what...

His term on fragility is different than what most people, when they hear the word fragile... It's the same term that Shelley Simpson used back in January on their Q1 conference call, which was... Or Q4 conference call, sorry. Which was the idea that the freight market feels fragile. She was talking about the fact that there isn't a lot of capacity out there.