American Trucking Associations says tonnage index is up year over year 

Jeff Berman, Senior Editor -- Logistics Management, 3/28/2008

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

The seasonally-adjusted tonnage index remained pinned at 117.2 (2000=100) in February, which the ATA said is the highest level the index has recorded in the last two years. And the ATA’s not seasonally adjusted index in February dropped 3.9 percent from January to 109.1. On a year-over-year basis, tonnage was up 3.5 percent in February compared to February 2007, representing the fourth straight year-over-year index increase for the month of February.

ATA Chief Economist and Vice President Bob Costello said in a statement that while the February index can be viewed as encouraging mainly because truck tonnage did not lose any of January’s solid 2.4 percent gain.

But despite this recent performance, the trucking industry is still in the midst of difficult market conditions, with a slowing economy, excess capacity, and recent talk of owner-operators preparing to stage an April 1 shutdown to protest the rapid increase in diesel prices, which are making it more challenging for owner-operators to keep their trucks on the road and remain in business.

Costello told LM that the trucking industry is presently not financially healthy, because “fuel pricing have wiped away profits for most carriers.”

And like last month Costello maintained that the U.S. economy is in a mild recession for the first half of 2008. He pointed out that truck tonnage typically leads general economic activity, noting that during the 2001 recession truck tonnage rebounded just as the aggregate economy was slipping into a recession.

With market conditions in their present condition, Costello said more time is needed to see what happens in terms of an economic rebound. Main reasons for this, cited by Costello, are high energy prices and too many current downside risks at the moment to say definitively that trucking is leading an economic recovery.

“Every recession is different,” said Costello. “I’d like to see two full quarters of positive tonnage growth before passing judgement.”  

Even with the difficult market conditions and a recession occuring, the recent tonnage figure is not bad, according to a research report from Stifel Nicolaus.

“The preliminary February is better than we would have expected, given the bleak anecdotes we have received recently from the trucking companies we follow, the Stifel report said. “However, an indication that freight demand is showing the initial signs of recovery is consistent with our outlook for 2008.”

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 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.