Trucking news: ATA says seasonally-adjusted for-hire Truck Tonnage Index is up for second straight month
Jeff Berman, Group News Editor -- Logistics Management, 7/31/2008
ARLINGTON, Va.—After three months of declining growth, the American Trucking Associations reported this week that its advanced seasonally-adjusted for-hire Truck Tonnage Index was up for the second consecutive month, with a 1.3 percent increase in June. This rise follows a 0.5 percent gain in May.
June’s seasonally-adjusted for-hire Truck Tonnage Index was 116.5 (2000=100), representing its highest level since last February when it hit 117.2, according to the ATA. It was up 5.4 percent on a year-over-year basis, which is the eighth consecutive year-over-year increase, as well as the biggest year-over-year gain since January of this year, which saw a 5.3 percent spike. And the not seasonally adjusted index was up 1.2 percent to 119.9 in June.
ATA Vice President and Chief Economist Bob Costello said in a statement that despite tonnage being up again in June, it is a “close call” as to whether the economy will enter into a recession later this year or significantly slow down. He added that truck tonnage levels may possibly slow down later this year, with the overall economy expected to be weak in the fourth quarter of this year and the first quarter of 2009.
And in a conference on ATA Truck Tonnage Data hosted by Stifel Nicolaus earlier today, Costello said that as a leading economic indicator and with the subject of a potential recession prevalent in the current economy, truck tonnage was in and out of recession before the aggregate economy ever entered into one in the last two recessions in 1991 and 2001.
“There are times when truck tonnage goes down, and the U.S. economy does not go into recession,” said Costello. “That may in fact happen with this go-around, although I think it is looking more likely that we may see a technical recession. But the index is a good leading economic indicator.”
Costello added on the call that truckload freight accounts for (in 2006 ATA data) 51 percent of all truck tonnage, with private fleets at 48 percent, and LTL at one percent.
Other factors having an impact on current industry conditions, according to Costello, include industry capacity continuing to tighten with carriers leaving the marketplace, due to high fuel prices, as well as reduced fuel prices.
And in a May interview with LM, Costello said rising fuel prices are a bigger problem for the motor carrier industry than freight volumes.
“Surging fuel prices are weighing heavily on consumers too; and since trucks haul virtually all consumer goods at some point in the supply chain, the industry is being significantly impacted both directly through higher diesel prices and indirectly as consumers pay more for gasoline and have less money to spend on truck-transported goods,” said Costello.
Another reason he cited in regards to capacity was how some carriers are taking trucks out of the U.S. market and selling them to foreign buyers in Eastern Europe and Central and South America.
Even with these market conditions in effect, things are looking up, according to one trucking executive.
"As capacity has exited the market at unprecedented rate and businesses get their footing, we are encouraged that the market is headed back toward a healthier equilibrium," said Con-way Inc. Vice President of Communications and Chief Marketing Officer Tom Nightingale.
Trucking serves as a barometer of the U.S. economy, because it represents nearly 70 percent of tonnage carried by all modes of domestic freight transportation, including manufactured and retail goods, according to the ATA. The ATA notes that it hauled 10.7 tons of freight in 2006, and that motor carriers collected $645.6 billion—or 83.8 percent—of total revenue earned by all transport modes.
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