Truck tonnage volumes saw increases in February on an annual basis, the gains may not necessarily be commensurate with actual positive industry and economic momentum, according to data issued this week by the American Trucking Associations (ATA).
Seasonally-adjusted (SA) for-hire truck tonnage in February at 144.0 (2000=100) climbed to an all-time high and was 7.2 percent of a revised 0.3 percent January gain. And it was up 8.6 percent annually, which far outpaced the 1.1 percent annual increase in January. On a year-to-date basis, SA tonnage is up 4.8 percent. ATA said this marks the largest monthly move for the index since January 2013 (11.4 percent) and the largest year-over-year increase since December 2013 (10.4 percent).
The ATA’s not seasonally-adjusted (NSA) index, which represents the change in tonnage actually hauled by fleets before any seasonal adjustment, was 129 in February, topping January’s 128.5 by 0.4 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.
“While it is nice to see a strong February, I caution everyone not read too much into it,” said ATA Chief Economist Bob Costello in a statement. “The strength was mainly due to a weaker than average January, including bad winter storms, thus there was some catch-up going on in February. Normally, fleets report large declines to ATA in February tonnage, in the range of 5.4% to 6.7% over the last three years. So, the small increase this year yielded a big seasonally adjusted gain. If March is strong, then I’ll get more excited. I’m still concerned about the elevated inventories throughout the supply chain. Last week, the Census Bureau reported that relative to sales, inventories rose again in January, which is troubling. We need those inventories reduced before trucking can count on more consistent, better freight volumes.”
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.”