Trucking news: ATA says March tonnage index down 3.3 percent

High diesel prices, economic conditions impacting over the road volumes

Jeff Berman, Group News Editor -- Logistics Management, 4/25/2008

ARLINGTON, Va.—The American Trucking Associations said that its seasonally-adjusted for-hire Truck Tonnage index dropped 3.3 percent in March, following a flat February.

The seasonally-adjusted tonnage index for March came in at 113.4 (2000=100), which the ATA said is its lowest level since November 2007. In January and February, the seasonally-adjusted index was 117.2, which was its highest level in the last two years, according to the ATA. This was viewed as a positive at the time by the ATA, because truck tonnage gains did not see a decline.

But March’s decline was not only visible in the tonnage index. The ATA also reported that tonnage contracted 0.2 percent in March compared to March 2007, which is its first year-over-year index decrease since 2007. And it added that the 3.3 month-to-month drop was the biggest month-to-month contraction since August 2006.

The ATA also reported that the not seasonally adjusted index was up 3.8 percent from February to 113.2.

ATA Chief Economist Bob Costello said in a statement that March’s performance is a “significant setback,” and that he had been “concerned that recent run-up in tonnage might not be sustainable.”

And as has been the case in recent months, the trucking industry is still experiencing difficult market conditions, due to the slowing economy, rising diesel and energy prices, and excess capacity still prevalent for nearly all motor carriers of all sizes.

In a March interview with LM, Costello said that the trucking industry is presently not financially healthy, because “fuel pricing have wiped away profits for most carriers.”

Costello also remained firm on his stance that the U.S. economy is in a mild recession for the first half of 2008, and he commented that the tonnage index’ decline in March may indicate that the economic contraction could be more severe than previously thought.

And he also told LM that truck tonnage typically leads general economic activity, pointing out that during the 2001 recession truck tonnage rebounded just as the aggregate economy was beginning to go into recession mode.

“Truck tonnage often leads both recoveries and recessions, and the latest contraction suggests the economy and trucking are not out of the woods yet,” Costello said in the ATA statement. “Surging diesel and gasoline prices are weighing heavily on consumers, and since trucks haul virtually all consumer goods at some point in the supply chain, the industry is going to be significantly impacted both directly through higher diesel prices and indirectly through lower freight volumes.”

Despite a down month, there were some notable takeaways of this month’s findings, according to a report written by Tom Albrecht, managing director of investment bank Stephens Inc.

“Most truckload carriers ended March with a positive sense of momentum in areas like mileage utilization (up slightly) and rates (starting to stabilize),” wrote Albrecht. “LTL carriers, on the other hand, have tended to describe March in ways that more closely resemble the tonnage index.”

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.