Trucking news: ATA says January tonnage up 2.4 percent

Jeff Berman, Senior Editor -- Logistics Management, 2/27/2008

ARLINGTON, Va.—The American Trucking Associations (ATA) said this week that its seasonally-adjusted for-hire Truck Tonnage index was up 2.4 percent in January, coming off of a 1.5 percent gain in December.

December’s performance was readjusted from its initial recording of a 4.1 percent gain that was announced by the ATA in January. The ATA said in a statement this is because it recently revised the Truck Tonnage index back five years, with the new seasonal factors resulting in lower 2007 volumes than were originally released.

The ATA added that on a seasonally-adjusted basis the tonnage index was up 5.7 percent at 117.3 (2000=100), which represents a 26-month high and its third straight sequential gain. And it also said that on a year over year basis, truck tonnage was up 5.3 percent, which the ATA noted was its largest yearly increase since January 2005. The not seasonally adjusted index was up 11.4 percent from December at 113.6, according to the ATA.

Although these figures appear to be encouraging, ATA Chief Economist Bob Costello told LM that this does not mean trucking volumes are fully back on track.

“Despite the recent improvement in tonnage, freight volumes have been soft for some time while costs have risen significantly, including diesel prices,” commented Costello. “Obviously this situation has been difficult for many fleets in an environment where capacity is relatively soft.  However, once freight volumes pick up consistently and the economy improves, capacity is expected to tighten relatively quickly.”

Even through truck tonnage is showing some signs of incremental growth, a research note from Stephens Inc. Managing Director Thom Albrecht reports that for roughly “the last year and a half there has been a real disconnect between U.S. GDP growth and truck volumes.” As an example, Albrecht cited the third quarter of 2007, when the GDP grew 4.9 percent, but truck tonnage was down by more than three percent.

Albrecht could not pinpoint exactly why there is such a disconnect in the gap between GDP output and trucking volumes, but he did offer a few possibilities: manufacturing comprising 16 percent of the U.S. GDP, but it is only creating 30-to-35 percent of the freight; the ongoing slumps in the housing and automotive industry, which accounts for almost one-quarter of the U.S. economy, a growing services-based economy that creates little freight; an industrial production slowdown; and freight that is more geared toward parcel, among others.

And while many carriers and analysts have indicated freight volumes will pick up in the second half of this year that is far from a certainty due to things like high oil prices, credit markets, poor retailer performances, and continued talk of a possible recession.

What’s more, a trucking industry executive recently told LM that he is not optimistic about a trucking rebound in 2008. But the source indicated that 2009 has more potential to be a better year in terms of a recovery. 

The reason for this cautionary approach, according to the executive, is due to the ongoing consumer spending slowdown and the subprime market slump, which he expects to have a prolonged effect on housing valuations—and subsequently impact consumer spending and retail performance.

And the ATA’s Costello added that the U.S. economy is either in a mild recession or on the brink of one, coupled with the fact that anecdotal reports that freight volumes are down this month.

Costello also said that he anticipates truck tonnage will recover before the general economy, but he is withholding judgment on whether it is in a recovery mode until one or two more months worth of data are analyzed.

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. It added that trucks hauled 10.7 billion 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.