ATA reports seasonally adjusted tonnage is flat in July and up 4.1 percent annually

As is the case with the overall economy, truck tonnage patterns remain largely uneven. That appears to be the main takeaway from data released by the American Trucking Associations (ATA).

The ATA reported that seasonally-adjusted (SA) truck tonnage in July—at 118.8 (2000=100)—was flat compared to June, which was up 1.2 percent compared to May, representing the largest month-to-month increase in 2012 year-to-date. SA tonnage was down 1.0 percent in May.

On an annual basis, SA tonnage in July was up 4.1 percent. The ATA said this is the largest annual SA gain since February 2012. This is an improvement over June’s 3.2 percent annual gain, which was the smallest annual gain since May 2012. On a year-to-date basis, SA tonnage is up 3.7 percent compared to the first seven months of 2011.

The ATA’s not seasonally-adjusted (NSA) index, which represents the change in tonnage actually hauled by fleets before any seasonal adjustment, fell 2.8 percent from June to 119.4. This represents an 8.4 decrease from July 2011.

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.

“July’s reading reflects an economy that has lost some steam, but hasn’t stalled,” ATA Chief Economist Bob Costello said in a statement. “Certainly there has been some better economic news recently, but I continue to believe we will see some deceleration in tonnage during the second half of the year, if for nothing else but very tough comparisons on a robust August through December period in 2011.”

The ATA economist also said that the recent slowdown in new factory orders will hinder manufacturing output and subsequently impact trucking volumes. And he said there is also concern regarding the “recent jump” in the total business—manufacturing, wholesale, and retail—inventory-to-sales ratio, explaining that unintended gains in inventories will hit trucking negatively as the supply chain works off stocks.

For 2012, Costello’s tonnage outlook remains in his previously forecasted range of 3 percent-to-3.5 percent. If this estimate holds true, it would come in below the matching annualized rates of 5.8 percent in both 2010 and 2011, according to ATA data.

This tonnage data comes at a time when various mixed economic signals remain intact, including flattish retail sales numbers for the majority of 2012 and a slowdown in manufacturing output in recent months, among others.

The malaise in trucking volumes does not come as a huge surprise, an industry expert told LM.

“In talking with numerous carriers, many have said they made their second quarter numbers but it was only because they had a strong April and May while June was in the tank,” said Mike Regan, president of TranzAct Technologies and LM blogger. “We are seeing behavior patterns which clearly indicate that for whatever tea leaves the carriers are reading, they are pointing towards writing off 2012.”

And the pall of an uncertain economy, coupled with an election year, Regan said there is a low level of confidence in the economy based on what people are seeing and hearing.

Avondale Partners analyst Donald Broughton commented in a research note that the ATA’s data suggest that freight demand remained stable last month while cautioning that it is difficult to determine a larger trend as July is typically one of the weakest months of the year.

“Given the recent weakness seen in the ISM (esp. new orders), retail sales, international freight (both air and sea), coupled with rising inventory-to-sales levels at all levels of the supply chain and diesel moving past $4/gal again, we find it difficult to predict a sustained improvement in truck tonnage in the coming months,” wrote Broughton. “In fact, we continue to expect truck tonnage growth to decelerate through the back half of the year (esp. given relatively tough comps) as a slowing macro environment weighs on overall demand.”