April Truck Tonnage Swells 9.4%

This story appears in the June 7 print edition of Transport Topics.

Trucking tonnage grew 9.4% in April above year-ago levels, the strongest monthly gain in more than five years and another sign of solid economic recovery, American Trucking Associations reported last week.

The seasonally adjusted index topped the March year-over-year growth rate of 7.5%, and tonnage now has climbed for five consecutive months after turning positive in December, the trade group announced May 28.

The previous best month was a 9.7% increase in January 2005.

“Truck tonnage volumes continue to improve at a solid, yet sustainable, rate,” said ATA Chief Economist Bob Costello, noting that the recent trends are a sign of a sustained economic recovery.

“Tonnage is being boosted by robust manufacturing output and stronger retail sales,” Costello added.

Another sign of gathering strength was the fact that April tonnage rose 0.9% from March, reversing the pattern that has shown an average decline of 0.2% from March to April, based on ATA statistics.

“We clearly have a better freight shipment market in 2010 than we did in 2009,” John Steele, executive vice president of Werner Enterprises, Omaha, Neb., said May 25.

The truckload carrier’s freight volumes have grown for five consecutive months this year, and that volume growth in the second quarter is consistent with normal seasonal volume trends, Steele said.

“We are gaining more and more confidence,” he said. “The last several weeks have been strong throughout the network.”

Judy McReynolds, chief executive officer of Arkansas Best Corp., owner of ABF Freight System, said tonnage in April rose 11%, compared with 3.3% in the first quarter. She said that part of that growth was due to stronger truckload business handled by ABF, whose primary business is less-than-truckload service.

Still another sign of progress was Cass Information Systems’ index of freight spending and shipment volumes; it increased more than 10% in April over 2009. The Cass index, like ATA’s gauge, was higher in April than it was in March.

The Institute for Supply Management’s Purchasing Managers Index hit 60.4 in April, which is among the highest readings in the past seven years, and remained strong in May at 59.7.

The ISM index measures how much manufacturers believe they will speed up the pace of production from month to month, with any reading above 50 signaling expansion. The index now has topped 50 for 10 straight months.

Retail sales have climbed for seven consecutive months. That economic barometer also gained in April over March levels, just like ATA’s tonnage index and the Cass survey, which is based on companies that pay $17.5 billion worth of freight bills annually.

Other indicators of optimism in April were the rise of 5.6 percentage points in consumer confidence as measured by the Conference Board, and a 2.9% rise in durable goods orders.

Transportation analyst Ed Wolfe told Transport Topics that all of the 50-plus companies making presentations at his firm’s freight conference last month said demand is strengthening.

“The truckload carriers started to see demand improve in January, and LTL picked up in February,” Wolfe said.

“All of [the carriers] said in March that demand was a step stronger, and they also said at that time, ‘We don’t want to get our hopes up,’ ’’ Wolfe said. “Now, after April and May, they are convinced the economic recovery is real.”

Another favorable trend was rising driver pay. Crete Carrier Corp. and Magnum Express both announced pay hikes for drivers recently, tying the increases to higher freight volumes they were experiencing.

“Underlying freight fundamentals were strong in May,” Robert W. Baird analyst Jon Langenfeld observed in a June 1 report. “Capacity remained tight across most modes.”

Capacity is tightest in the truckload and intermodal sectors, he said.

The favorable supply/demand balance that is emerging means that the spot market for freight capacity will remain healthy, Langenfeld said.

TransCore, which operates a freight-matching service, reported that the number of loads posted in May more than doubled from the same month of last year but slipped below April volumes.

The company’s senior vice president, David Schrader, said the latest trends reflected a strong seasonal surge in freight traffic that occurred earlier than usual this year.

Langenfeld also raised a note of caution about the pace at which demand is growing and said he expects the growth pace to slow throughout the year.

ATA’s seasonally adjusted index reached 110.2, the highest level since November 2008. Over the first four months of 2010, tonnage has gained 6%, ATA reported.

The federation’s unadjusted index, which reflects actual freight volume moved, was 111.3, down 4.4% from March.