ATA reports sluggish tonnage output for March

Positive truck tonnage momentum from February did not entirely carry over in March, according to data issued by the American Trucking Associations (ATA).

Seasonally-adjusted (SA) for-hire truck tonnage in March at 137.6 (2000=100) was off 4.5 percent from February’s 144, which ATA said represented an all-time high.  On an annual basis, the SA is up 2.2 percent annually, which was 6.4 percent below the 8.6 percent annual increase seen in February. And on year-to-date basis, SA tonnage is up 3.9 percent.

The ATA’s not seasonally-adjusted (NSA) index, which represents the change in tonnage actually hauled by fleets before any seasonal adjustment, was 142.1 percent in March for a 10.2 percent hike over February, and it was up 1.7 percent over March 2015. 

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.

“As expected, tonnage came back to earth in March from the jump in February,” said ATA Chief Economist Bob Costello in a statement. “These things tend to correct, and March took back more than half of the surprisingly large gain in February. The freight economy continues to be mixed, with housing and consumer spending generally giving support to tonnage, while new fracking activity and factory output being drags. In addition, freight volumes are softer than the overall economy because of the current inventory overhang throughout the supply chain.”

That sentiment was echoed by DAT analyst Mark Montague in a blog posting, with Montague explaining freight growth has been disappointing, inventories are still high, and consumers are not consuming.

“Economists had hoped that the savings on gas would prompt consumers to increase spending on goods and services that generate freight,” he wrote. “It’s just not happening. GDP growth is tepid, at best. New car sales are up, but many other economic sectors are nearly stagnant.”

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.”