April truck tonnage sees a sequential decline in April, ATA reports

Sequential truck tonnage volumes saw another decrease in April, according to data issued today by the American Trucking Associations (ATA).

Seasonally-adjusted (SA) for-hire truck tonnage in April at 134.8 (2000=100) fell 2.1 percent from March and on the heels of a 4.4 percent February to March decrease. Compared to April 2015, the SA saw a 2 percent gain, and on a year-to-date basis the ATA said that tonnage was up 3.5 percent and due largely to the SA hitting an all-time high of 144 in February. When February is removed from the year-to-date tally, ATA said that the SA is up 1.8 percent annually.

The ATA’s not seasonally-adjusted (NSA) index, which represents the change in tonnage actually hauled by fleets before any seasonal adjustment, came in at 135.1 in April, falling 5 percent from March’s 142.2. On an annual basis, the NSA was up 3.3 percent.

As defined by the ATA, the not seasonally-adjusted index is assembled by adding up all the monthly tonnage data reported by the survey respondents (ATA member carriers) for the latest two months. Then a monthly percent change is calculated and then applied to the index number for the first month.

“After having an abnormally large seasonally adjusted gain in February, tonnage fell in April, in addition to the large drop in March,” said ATA Chief Economist Bob Costello in a statement. “However, while freight remained soft in April, based on other economic indicators, the outlook for tonnage is a little better than just a couple of months ago. With that said, there is still an inventory correction transpiring throughout the supply chain that will keep a lid on truck freight volumes in the near term,” he said. “As a result, we are still likely to experience lackluster tonnage numbers in the next few months.”

At last month’s NASSTRAC conference, Costello said that the economy is not as good or bad as it seems, noting there are three-and-a half-things driving the economy: the consumer, factory output, housing starts, and the inventory cycle.”

Consumers, he explained, are what always truly drives freight volumes, with housing starts typically seeing ups and downs, with the current market having come a long way off of the bottom. But factory output remains soft and continues to be an economic laggard, due to things like high inventories and the dollar appreciating as a rapid pace, which had a negative impact on factory output and exports.

As for the former, Costello said there are times when the inventory cycle has no impact on trucking and freight transportation volumes, but that is not currently the case today, explaining that inventories are having an overriding impact on freight volumes today.

As previously reported, the inventory overhang continues to hinder freight transportation volumes and particularly impacts trucking as it moves roughly 70 percent of all U.S. freight.

When inventory levels run too high as they currently are now, it often results in transportation volumes seeing declines.

What’s more increased consumer spending levels during the holidays did not materialize to anticipated levels, with December retail sales underwhelming, coupled with consumers having opted to pay down debt rather than shop more even though low gas prices were viewed not all that long ago as something that would spur increased spending, and another thing being a way to empty shelves and warehouses of the excess inventory, which is clearly needed.

Industry analysts have noted that the most recent batch of ATA numbers reflect muted freight demand, which is also apparent in terms of weak spot market demand and soft truckload capacity, too.

Trucking executives are not bullish about 2016, given the inventory situation and flat GDP growth. And the recent slump on the manufacturing side also is contributing to depressed tonnage numbers as well.

Many industry analysts cite how demand over all remains muted or sluggish, with capacity levels on the loose side, which is being manifested in low spot market rates.

But according to Stifel analyst John Larkin a long view may be required to gauge future trucking volume patterns.

“Demand is likely to continue rising as the U.S. population grows, as manufacturing comes back to North America, and as U.S. exports of Western lifestyle goods become increasingly appealing to Europe and Asia, he wrote in a research note. “Capacity is likely to grow slower than demand as the driver shortage persists. The inevitable mother of all capacity shortages should become evident in the 2017 timeframe as capacity sapping regulations near full implementation.”