August Truck Tonnage Rises 5.9%; ATA Cites US Freight Volatility

This story appears in the Sept. 26 print edition of Transport Topics.

U.S. truck tonnage jumped 5.9% in August, an increase attributed to volatility rather than clear economic growth and the largest year-over-year gain for the American Trucking Associations index since May.

The report, released Sept. 20, said the seasonally adjusted index level for August was 141.8 compared with 133.9 in the same month last year. Sequentially, the index level was 134.2 in July.

It was 139.3 in May, when the gain also was 5.9%. The record was set in February at 144.

The index compares shipping activity to a base level of 100 in 2000.

“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 Bob Costello, ATA chief economist.

“What is clear to me is that normal seasonal patterns are not holding,” he added.

The eight-month cumulative performance for the index is a 3.5% gain over the comparable period in 2015, the report said.

The index reading before adjustment was 144.7 in August, a 4.8% increase over 138.1 in July.

Costello said the number of shipments moved, also tracked by ATA, has generally been running below tonnage levels.

The multimodal Cass Freight Index for August was largely consistent with the ATA tonnage report. The number of shipments dipped 1.1% from August 2015, while spending on shipping fell 6.3% over the same time. However, both August numbers were up from July levels.

“Overall shipment volumes and pricing are persistently weak, with increased levels of volatility as all levels of the supply chain continue to try to work down inventory levels,” said Avondale Partners stock analyst Donald Broughton, who writes the report for Cass.

Specific to trucking, Broughton said, “No matter how it is measured, the data coming out of the trucking industry have been both volatile and uninspiring.”

Two trucking company executives expressed optimism for 2017.

“Our less-than-truckload distribution and truckload businesses are somewhat tepid and moderate — towing the line,” said Scott George, CEO of TCW Inc. in Nashville, Tennessee. But its intermodal business in the Southeast is the jewel in its crown.

“It’s hard to quantify because we’re only four months into the Panama Canal expansion, but we’re seeing a little bit of a swell and I think it will continue,” George said. He credited management at the ports of Charleston, South Carolina, and Savannah, Georgia, for preparing well for the giant Neopanamax containerships, and the result is that his port trucks remain busy.

George said he expects modest LTL and truckload growth in 2017 with port work doing better.

Sherri Brumbaugh, CEO of truckload carrier Garner Trucking in Findlay, Ohio, said her 100 power units mainly haul for shippers in retail. Her customers’ customers are “tentative in their purchases.”

Although Brumbaugh called the current environment “sluggish,” she also said her shippers are expecting a busier 2017, some of that driven by higher disposable income.

“I’m running a small business, and my wages paid have increased exponentially over the last three years,” Brumbaugh said. “I think that’s great because I’d much rather put money into wages rather than my fuel tanks.”

Garner Trucking’s requests for proposals for 2017 are on the rise, she said, describing shippers as eager to lock in rates.

Experts speaking at a conference for Bloomington, Indiana-based FTR on Sept. 13-15 agreed with the sluggish description.

“Things aren’t bad, but neither are they good,” said Chief Operating Officer Jonathan Starks.

“In the near term, we see year-over-year growth stuck around 1%, meaning the market isn’t growing fast enough for carriers to benefit from pricing pressure,” Starks said, adding that at least pricing is not eroding farther.

FTR forecasts growth in truck loadings of 1% to 2% in 2017.

Costello said of his near-term expectations, “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 forecast, truck freight will improve as progress is made with the inventory overhang,” he added.