Transportation

Truck Tonnage Index Rose 2.1% in August

Trucking, which represents nearly 69% of tonnage carried by all modes of domestic freight transportation in the U.S., serves as a barometer of the economy. In 2008, trucking moved about 10.2 billion tons of freight. Motor carriers collected $660.3 billion, or 83.1% of total revenue earned by all transport modes.

The for-hire truck tonnage index of the American Trucking Association (ATA) advanced 2.1% to 104.1 (2000=100) in August, following a similar growth recorded in the previous month. The non-seasonal adjusted index, which represents the change in tonnage actually hauled by the fleets before any seasonal adjustment, equaled 105.8 in August, down 0.5% from July.

Compared with August 2008, seasonal adjusted tonnage fell 7.5%, which was the best year-over-year showing since November 2008. June's 13.6% contraction was the largest year-over-year decrease of the current cycle.

ATA Chief Economist Bob Costello stated that truck tonnage would continue to be irregular in the months ahead, but it might not necessarily be a bad thing. "It is not unusual for an economic indicator to become volatile before changing direction," he said. Costello is hopeful that truck tonnage has finally hit bottom, as it has been bouncing around a seven-year low for the last few months. "While I am optimistic that the worst is behind us, I just don’t see anything on the economic horizon that suggests freight tonnage is about to rise significantly or consistently," Costello said. "Still, even small gains are better than the February 2008 through April 2009 cumulative tonnage reduction of 15.5%."

Costello also mentioned that inventories, relative to sales, are still too high in much of the supply chain, especially in the manufacturing and wholesale industries. The current high inventory levels are stalling truck tonnage levels. Further, he added that he doesn’t expect tonnage to deteriorate much further and that any growth in tonnage over the next few months is likely to be modest.

ATA Chief Economist Bob Costello said, “While most key economic indicators are decreasing at a slower rate, the year-over-year contractions in truck tonnage accelerated because businesses are right-sizing their inventories, which means fewer truck shipments. The absolute dollar value of inventories has fallen, but sales have decreased as much or more, which means that inventories are still too high for the current level of sales. Until this correction is complete, freight will be tough for motor.