Truck tonnage remains in familiar territory in October, reports ATA

The American Trucking Associations (ATA) reported today that truck tonnage readings for the month of October were mixed.

Seasonally-adjusted (SA) for-hire truck tonnage in October at 131.6 (2000=100) was down 0.3 percent compared to September after a 6.3 percent September decline and is off from an all-time high of 144 recorded last February. On an annual basis, the SA is down 0.9 percent for its second straight year-over-year decline, with October’s difference not as high as September’s 1.3 percent difference. On a year-to-date basis through October the SA is up 2.5 percent.

The ATA’s not seasonally-adjusted (NSA) index, which represents the change in tonnage actually hauled by fleets before any seasonal adjustment, was 138.2 in October, which was ahead of September by 1.9 percent and down 1.4 percent annually.

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.

“While seasonally adjusted tonnage fell, meaning the not seasonally adjusted gain wasn’t as large as expected, the bottom of the current tonnage cycle should be near,” said ATA Chief Economist Bob Costello in a statement. “There are some recent trends that suggest truck freight should improve, albeit gradually, soon. Retail sales, housing starts, and even factory output all improved in October, which is a good sign. Most importantly, there has been considerable progress made in clearing out excess stocks throughout the supply chain. While that correction is still ongoing, there has been enough improvement that the negative drag on tonnage shouldn’t be as large going forward,” he said.

At the FTR Transportation Conference in Indianapolis in September, 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.”