February Truck Tonnage Rises

This story appears in the March 29 print edition of Transport Topics.

Truck tonnage rose 2.6% in February, the third consecutive year-over-year increase, as the industry continues a steady rebound, American Trucking Associations reported.

ATA said its advance seasonally adjusted index was 108.5 in February, compared with 105.4 a year earlier. Following 15 straight months of declines, the index started moving higher in December.

On a sequential basis, the index dipped 0.5% from January, possibly because of the blizzards that slowed East Coast operations. Because of that harsh weather, the February reading is difficult to interpret, ATA Chief Economist Bob Costello said.

“The economy is growing moderately,” Costello told Transport Topics. “Moderate gross domestic product growth suggests moderate tonnage and load growth.”

Two other factors, inventories and demand, also are helping trucking. A drawdown of inventories that dampened truck shipments last year has helped to boost fleets in February and March as stores restocked goods, Costello said.

“I continue to hear from motor carriers that both the demand and supply situations are steadily improving,” Costello said. “When you put all three factors together, the industry is on the path to recovery and is perhaps doing a little bit better than the economy. Certainly, it will take a while to make up the ground lost during the recession.”

The year-over-year tonnage im-provement was reinforced by carrier executives’ comments, information from load board operators that measure demand in the spot freight markets and analysts’ reports.

In addition, intermodal volumes continue to charge ahead of other rail freight, rising at a double-digit pace over the past two months.

“Last year in March, we were just plain not busy,” Steve O’Kane, president of A. Duie Pyle, told TT. “This year, there has been a really unexpected increase.”

Tonnage is up 20% year-to-year this month, double the growth rate for January, he said.

The West Chester, Pa.-based fleet’s operations were “hammered” by blizzards last month that hit hardest at its operation centers in New Jersey and eastern Pennsylvania, O’Kane said. Bad weather shut down all 15 terminals, stretching from New England to Virginia, for one or more workdays.

O’Kane said the volume growth resulted from a combination of market share gains and higher volumes from long-term customers, and it created the need to hire more than 80 drivers.

“We are seeing strength in all of our sectors,” said John Hancock, an executive at truckload carrier Prime Inc., Springfield, Mo., which handles refrigerated, flatbed and food grade shipments. “We are trending positively. Everyone is a little afraid to be overly optimistic at this time.”

“Is it more business or less capacity?” Hancock asked. “It doesn’t matter to us. The laws of supply and demand haven’t been repealed.”

“We’ve seen a distinct acceleration in freight volumes in February and now in March,” David Schrader, senior vice president of operations for load board operator TransCore Freight Business Services, Portland, Ore., told TT. “We’ve seen a continued uptick since the fourth quarter of 2009.”

TransCore’s load-to-truck ratio on its load board was three times higher this month than it was in March last year, and rose this month from February in line with seasonal freight trends, he said.

Internet Truckstop also operates a load board. It reported its market demand index, which measures load and truck availability, reached 8.55 on March 22. That’s the highest level in two years.

Jon Langenfeld, a Robert W. Baird analyst, said the 0.4% growth in the company’s freight index last month was held down by bad weather.

“As volume trends remain stable with modest 2010 year-to-date growth, investors now are focused on the pace of freight recovery,” he said in a report. “Expect potentially uneven results ahead of a more sustained recovery in mid-2010.”

He also was encouraged by international freight trends, adjusted for the effects of the Chinese New Year, which occurs at different times in the first quarter each year. That volume rose 14% in January and February.

Truck tonnage moved up last month, along with some key indicators, such as orders for durable goods, but excluding transportation equipment such as aircraft, which rose 0.9%, the Commerce Department reported. Inflation remained in check, as the consumer price index remained unchanged.

However, some reports, such as those showing declining new-home sales and higher continuing unemployment claims, continued to show a drag on the economy.

The not-seasonally-adjusted index was 97.6 in February, down 0.8% from January.