Trucking news: ATA says July tonnage down 0.3 percent

Jeff Berman, Group News Editor -- Logistics Management, 8/27/2008

ARLINGTON, Va—Coming off of two consecutive months of growth, the American Trucking Associations (ATA) announced this week that its advanced seasonally-adjusted For-Hire Truck Tonnage Index fell 0.3 percent in July, representing the first month-to-month decline since April, according to the ATA.

July’s seasonally-adjusted For-Hire Truck Tonnage Index was 116.2 (2000=100). This figure was 4.4. percent ahead of July 2007, representing its ninth consecutive year-over-year increase, but it came up a full percentage point short of the 1.3 percent Index gain from this June. The ATA’s not seasonally adjusted index was down 0.1 percent to 119.7. On a year-to-date basis, the ATA said that the For-Hire Truck Tonnage Index is up 3.6 percent compared to the first seven months of 2007. On an annual basis, the ATA reported that tonnage contracted 1.7 percent in 2006 and 1.5 percent on 2007.

July’s performance matched up with various anecdotal reports from motor carriers that indicated July freight would be softer than July, ATA Vice President and Chief Economist Bob Costello said in a statement. He also said that truck tonnage has the potential to be volatile over the next few months, because the United States economy is expected to further soften before improving. But despite this, he noted that slight declines in fuel prices and tightening of capacity may offset softer freight volumes.

July’s output matches up with Costello’s projection from last month 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 as well.

Despite a sluggish economy and ongoing talk that the US is in a recession, Costello said in a Stifel Nicoloaus conference call last month that as a leading economic indicator and with the subject of a potential recession prevalent, truck tonnage was in and out of recession before the aggregate economy ever entered into one during 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 we may see a technical recession. But the Index is a good leading economic indicator."

Trucking serves as a barometer of the US economy, because it represents nearly 70 percent of tonnage carried by all modes of domestic freight transportation, including manfactured and retail goods, according to the ATA. The ATA notes that trucks hauled 10.7 tons of freight in 2006, and that motor carriers collected 4645.6 billion—or 83.8 percent—of total revenue earned by all transport modes.