August truck tonnage volumes see gains, reports ATA

With macroeconomic indicators as mixed as they have been in several quarters, data issued this week by the American Trucking Associations pointed to truck tonnage volumes pointing up in August.

Seasonally-adjusted (SA) for-hire truck tonnage in August at 141.8 (2000=100) was up 5.7 percent over July, which was down 2.1 percent compared to June. This reading is 1.5 percent the all-time high SA reading of 144 this past February. And on an annual basis the August SA is up 5.9 percent for its largest monthly annual increase going back to May, which was also up 5.9 percent, while topping June’s 0.2 percent annual gain. On a year-to-date basis, the SA index is up 3.5 percent.

The ATA’s not seasonally-adjusted (NSA) index, which represents the change in tonnage actually hauled by fleets before any seasonal adjustment, was 144.7 in August, topping July by 4.8 percent.. Compared to August 2015, the NSA was up 5.5 percent. According to ATA data, during the month of August over the previous three years, the average change in not seasonally adjusted tonnage was just 0.3%, whereas this August, tonnage surged 4.8%.

As defined by the ATA, the NSA 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.

“Volatility continues to reign in 2016. This month’s tonnage reading highlights this fact and underscores the difficulty in determining any real or clear trend in truck tonnage,” said ATA Chief Economist Bob Costello in a statement. “What is clear to me is that normal seasonal patterns are not holding in 2016. Despite a difficult to read August, I expect the truck freight environment to be softer than normal as well as continued choppiness until the inventory correction is complete. With moderate economic growth forecasted, truck freight will improve as progress is made with the inventory overhang.”

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.

And 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.

At last week’s FTR Transportation Conference in Indianapolis, many shippers and carriers labeled the current state of the truckload market as lukewarm, with flattish or minimal growth.

FTR Senior Partner Noel Perry said the sector is at a down point in growth, with expectations for 2017 mildly better from a freight demand standpoint.

Perry said that trucking over all is down a bit and not in recession from a macro standpoint, but there are some sub-sectors that are fairly weak like dry van. But in rail, intermodal, and barge, he said it definitely feels like recession. 

“Things are changing in this business, and the economy is a really important driver,” he said. “The next five years are going to be extremely uncertain and dynamic. What the historical data says very clearly is when you are late in a recovery, the exposure to another recession rises. Over the next three years, base case expectations should be very conservative. What we know about transportation is that…late in recoveries it performs below the level of GDP, so if GDP is at 2.1 percent, your [growth] number is going to be lower. Don’t bet the farm on growth unless you are going to steal market share from your competitors. It is really important to have a recession plan in your back pocket and be prepared for that exposure.”