From transportation analyst Ken Hoexter at Merrill Lynch (I have added some highlighting):
Hoexter's Thought of the Week
Transport data supports recovery
We are seeing a handful of positive data points from the transport industry, historically a harbinger of economic productivity. This week's rail carloads were up 9.3%, to 759,971, the largest absolute level of carloads since December 6, 2008. Despite having just increased our rail estimates above consensus, quarter-to-date rail carloads are already running nearly 2% ahead of our revised target. In particular, this week's data showed marked improvement across each carload type, with particular strength in chemicals, intermodal, coal, and forest products.
This week's IATA air freight data showed volumes up 28% year-over-year for January, which was also a 3% sequential gain from December. Not only is this a rare feat during a traditionally weak month following the holiday season, but the positive data points further magnify the strength of the air freight recovery.
On the ground, we continue to hear positive commentary about truckload volumes, and about a robust spot pricing market at the end of February. While a portion of this is due to inventory restocking, retailer read-through's are likewise positive, indicating confidence rebuilding. Composite same-store sales for specialty retail and department stores increased 6% and 4% in February, compared to drops of 9% and 12% last February, respectively.
This greatly contrasts the recent negative headline from the Institute for Supply Management, whose ISM index level posted a deterioration of 2 points to 56.5 from February's 58.4, which had caused some investor concern. Thus, the strong data further supports our positive views on the truckload, rail, and airfreight sectors