Truck tonnage volumes are mixed in June, reports ATA

Sequential and annual truck tonnage volumes for the month of June were mixed, according to data released this week by the American Trucking Associations (ATA).

Seasonally-adjusted (SA) for-hire truck tonnage in June at 137.2 (2000=100) saw a 1.5 percent decline off of a revised 2.9 percent May increase (May was at 139.3). June was down 7.2 percent compared to the all-time high of 144 reached in February of this year. On an annual basis, SA tonnage is up 3.7 percent, but the ATA noted that when excluding February’s year-high tally, it is up 2.7 percent.

The ATA’s not seasonally-adjusted (NSA) index, which represents the change in tonnage actually hauled by fleets before any seasonal adjustment, was 142.2 in June, which topped May’s 139.1 by 2.2 percent. Compared to June 2015, the NSA was up 2.8 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.

“The seesaw pattern continued again in June with tonnage falling after a good rise in May,” said ATA Chief Economist Bob Costello in a statement. “On a month-to-month basis, tonnage has been down in three of the last four months, totaling 4.7 percent since February. Looking ahead, I expect the freight environment will remain choppy. The good news for trucking is we are the most diverse mode of all freight transportation sectors between industrial and consumer freight. We are currently benefiting from the consumer side while being hurt on the industrial side. And of course we still have the inventory glut that is weighing down tonnage.”

The uneven tonnage volumes are also driven, in part, to fluctuating retail sales and jobs numbers, too, while recent consumer confidence numbers portend optimism for future economic growth to varying degrees.

At the NASSTRAC conference last spring, 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 drive 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.

“After a dismal period of freight from January through May, there was an improved tone in June, especially in TL, which was reflected in improved freight anecdotes and spot market data,” wrote BB&T Capital Markets Analyst Thom Albrecht. “Naturally, this begs the question whether the market has turned or whether it was merely a normal seasonal uptick? After all, June is typically the third best freight month in most years and one would expect an end of quarter push even in a challenging year.”