August truck tonnage volumes are solid, reports ATA

August truck tonnage volumes were mostly positive, according to data issued yesterday by the American Trucking Associations (ATA).

The ATA’s advanced seasonally-adjusted (SA) For-Hire Truck Tonnage Index for August, at 118.3 (2015=100), fell 3.2% on the heels of a 6.2% (revised down form 6.6%) July increase. On an annual basis, August SA tonnage was up 4.1%, which was off from July’s 7.3% annual spread, its largest annual gain going back to April. SA tonnage is up 4.3% through the first eight months of 2019. 

The ATA’s not seasonally-adjusted (NSA) index, which represents the change in tonnage actually hauled by fleets before any seasonal adjustment and the metric ATA says fleets should benchmark their levels with, came in at 125.1 (2015=100) in August, which was 2.2% ahead of July’s 122.3 (which was slightly revised from an original reading of 122.8).

“The large swings continued in August, but the good news is the trend line is still up,” said ATA Chief Economist Bob Costello in a statement. “While there is concern over economic growth, truck tonnage shows that it is unlikely that the economy is slipping into a recession.  It is important to note that ATA’s tonnage data is dominated by contract freight, which is performing significantly better than the plunge in spot market freight this year.” 

Celadon CFO Thom Albrecht explained on a recent Webcast hosted by TranzAct Technologies, CSCMP, and NASSTRAC that up until around mid-2019, roughly 80%-to-85% of the things carriers had been experiencing was due to the infusion of supply and what he called a modest downtick in demand, with demand becoming more uncertain in recent months.

Signs of declining demand were evident in the most recent manufacturing data points issued by the Institute for Supply Management, which Albrecht said serves as a future gauge of freight production. ISM reported in early September that its key manufacturing reading, the PMI, was below 50 (a reading of 50 or higher indicates growth is occurring) for the first time since August 2016, with new orders, the most direct indicator of demand, negative for the first time since December 2015, snapping a 43-month stretch of growth.

“Supply was the biggest impact on the first half of the year, and it continues to be an overhang but more concerning has been the little bit of a drop-off in demand. Since mid summer that has been a little bit more pronounced and I blame that on Washington,” said Albrecht.

And Universal Logistics CEO Jeff Rogers said on the same Webcast that the changes in trucking, from 2018 to 2019, were unexpected, in the sense of how rapidly things have changed, noting how things have been softer than expected on the truckload side since the beginning of 2019 and never really came back.

What’s more, Rogers said that while current freight volumes are not “horrible,” they are OK but not as strong as what was expected either. And he was succinct in describing how current trends point to signs of a lack of a typical Peak Season for this time of year, too.

“There is still a lot of uncertainty, and a lot of that is driven by what is going on with things related to trade and tariffs, among others,” he said. “But clearly there was some over-exuberance last year that created maybe some of the extra capacity, because many thought this cycle would last a lot longer than they normally do but that was not the case.”