February Truck tonnage sees slight decline compared to January, reports ATA

The American Trucking Associations (ATA) reported today that February truck tonnage volumes dipped in February, following growth in January to kick off 2019. 

The ATA’s advanced seasonally-adjusted (SA) For-Hire Truck Tonnage Index for February, at 117.4 (2015=2000) fell 0.2% in February after heading up 2.5% (revised up from an original 2.3% reading) from December to January, which came in at 117.6.  Compared to January 2018, SA tonnage rose 5.4%, which trended down from January’s 5.8% annual spread.

For all of 2018, SA tonnage was up 6.7% annually, marking the biggest annual SA gain going back to 1998, according to ATA data. Trucking activity was solid throughout 2018, buoyed by strong economic fundamentals like low unemployment and strong consumer spending. While concerns over trade tension and tariffs remain intact, trucking capacity remains fairly tight, coupled with decent pricing and steady demand.

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, was 106.9 (2015=100) in February, which was 5.7% off compared to January’s reading of 113.3.

“After a strong January, I’m a pleasantly surprised that the index didn’t fall much last month,” said ATA Chief Economist Bob Costello in a statement. “I continue to expect tonnage to moderate like other indicators, including retail sales, manufacturing activity and housing starts. Additionally, the level of inventories throughout the supply chain have increased, which is a drag on truck freight.”

Looking at the state of the freight economy at last month’s RILA Link 2019 Supply Chain Conference, Costello said that people need to set their expectations differently for 2019 when compared to a very good 2018, in that the economy will grow, albeit at a slower rate.

That was made clear in GDP estimates Costello provided, with 2019 GDP pegged to hit 2.4%, 1.6%, 2.5%, and 2.1%, respectively for the first, second, third, and fourth quarters.

While these may numbers may look somewhat dim when placed against what can be viewed as a robust 2018, Costello made it clear that key economic fundamentals remain firmly intact.

These fundamentals include things like still strong consumer activity, as well as a solid job market.

Addressing the latter, he said that there are currently more job openings than there are unemployed people, which “does not usually happen.” What’s more, he raised the question of what happens when full employment is reached, as it relates to wages. And the short answer was that wages go up, which obviously continues to support economic growth and freight activity.

“Last year, we were at the height of the cycle with wage growth of 3% and consumers continuing to spend on goods…it will likely slow down a bit but the fundamentals remain good,” he said.

On the other end, though, are housing starts, which Costello labeled a disappointment, even though there 2018 represented the best year for housing starts since 2007, with recent months showing a flatness in the market. How so? Well, the December 2016 new housing starts numbers, he said, were the weakest going back to September 2016.

Costello attributed the recent slump to a combination of some supply issues, coupled with mortgage rates rising. Housing issues, at the moment, aside, Costello said factory output remains strong, up 2% in 2018, with a bullish future outlook.

“This all leads to a growing economy and a growing trucking sector, too, but not quite as strong as 2018,” explained Costello.