Trucking: November tonnage shows solid annual growth, says ATA

The American Trucking Associations (ATA) reported today that seasonally-adjusted truck tonnage had a strong month in November, with a 0.3 percent gain over November and a 6 percent annual gain, which marks its biggest annual increase since last June’s 6.5 percent bump.

The SA index is currently at 116.6 (2000=100), with the 0.3 percent gain over October a notch below October’s revised 0.4 percent increase. It was up 1.5 percent in September, down 0.5 percent and down 1.3 percent in August and July, respectively and up 2.6 percent in June, which was preceded by 0.6 and 2.0 percent declines in April and May, respectively, continuing a largely uneven pattern of freight transportation volumes.

The ATA’s not seasonally-adjusted (NSA) index, which represents the change in tonnage actually hauled by fleets before any seasonal adjustment, hit 115.3 in November for a 2.2 percent sequential decline from October’s 118.5. Compared to November 2010 it was up 6.4 percent, which was up from the 4.8 percent annual improvement in October.

As LM has reported, some industry analysts maintain that the not seasonally-adjusted index is more useful, because it is comprised of what truckers haul. 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 I said last month, tonnage levels continue to point to an economy that is growing, not sliding into a recession,” ATA Chief Economist Bob Costello said in a statement. “Over the last three months, tonnage is up 2.3 percent and stands at the highest level since January of this year. Two primary factors have helped truck tonnage in recent months.  First, manufacturing output, which generates a significant amount of truck freight, has generally been increasing.  Second, retail inventories are very lean, which is helping freight as well since retailers don’t have much excess stock and need to replenish when sales go up.”

Costello’s latter point has been intact since well before the holiday shopping season commenced, as retailers don’t want to be caught with extra stock following the holidays, which, in turn, forces them to sell leftover stock at a sharp discount in the first quarter.

Well ahead of holiday shopping season, though, manufacturing has been seen as a primary driver of any economic momentum currently occurring, with retail sales mostly flat heading into the holiday season, coupled with the lack of a real 2011 Peak Season.

But even before holiday shopping kicked off in earnest, many carriers told LM demand was steady, with the expectation that it would remain that way through the holidays. But in recent months, both shippers and carriers have said that even though things are relatively steady in light of an uncertain economy, a good amount of the momentum occurring in the market earlier in the year has dropped off.

Avondale Partners analyst Donald Broughton wrote in a research note that the future outlook for trucking volumes is strong, explaining that the most important leading indicators continue to point toward growth: lean inventories; the ISM PMI remaining in positive territory; tight capacity, coupled with carriers pushing out rate increases for the third straight year; and positive early holiday shopping trends.

“In light of the current strength that trucking activity is showing and the positive backdrop, we are projecting Q4’11 and Q1’12 tonnage growth of +5.4 percent and 3.1 percent, respectively,” wrote Broughton. “Our bullish outlook on truck tonnage, and faith in its predictive ability, lead us to believe that U.S. economic growth will surprise to the upside in the coming quarters.”