October truck tonnage levels remain in familiar territory

October truck tonnage levels remained in similar territory compared to previous months, according to data issued by the American Trucking Associations (ATA).

Seasonally-adjusted (SA) for-hire truck tonnage in October at 135.7 (2000=100) was up 1.9 percent compared to September’s 133.1, which was down 0.7 percent from August. The current SA level is just below January’s all-time high of 135.8.

And on an annual basis, the SA is up 2 percent compared to October 2014, topping September’s 1.6 percent annual gain. Year-to-date through October, SA tonnage is up 3 percent compared to the same period in 2014.

The ATA’s not seasonally-adjusted (NSA) index, which represents the change in tonnage actually hauled by fleets before any seasonal adjustment was 139.8 in October, which was 0.9 percent ahead of September. The October SA was 0.4 percent below the 140.4 recorded in October 2014.

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.

“It was good to see tonnage increase nicely in October after contracting a total of 1.6 percent in August and September” said ATA Chief Economist Bob Costello in a statement. “However, tonnage has been overall pretty flat this year, as October’s reading is just shy of January’s level. Like I’ve said over the last couple of months, I remain concerned about the high level of inventories throughout the supply chain. We recently learned that inventories throughout the supply chain and relative to sales rose in September, which is not a good sign. This will have a negative impact on truck freight volumes over the next few months.”

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 running too high as they currently are now, it typically results in transportation volumes seeing declines, which is where things currently stand as with holiday shopping season set to begin in earnest.
That is good timing on two fronts: one being that it will result in increased consumer spending levels, which has been largely flattish as consumers have 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.
Deutsche Bank analyst Rob Salmon said in a research note that his firm is cautious about the near-term outlook for freight demand given elevated inventories, and soft manufacturing demand.