March Tonnage Increases 2.2% Amid Slow Economic Growth
This story appears in the April 25 print edition of Transport Topics.
Truck tonnage rose 2.2% in March on a year-over-year basis, reflecting slow economic growth and mixed freight trends, American Trucking Associations reported.
The federation’s advanced seasonally adjusted for-hire truck tonnage Index stood at 137.6, ATA re?ported April 19, retreating as expected from the all-time record of 144 that was reached in February. The 4.5% month-to-month decline was the largest drop since September 2012.
“The freight economy continues to be mixed, with housing and consumer spending generally giving support to tonnage, while new fracking activity and factory output being drags,” said ATA Chief Economist Bob Costello. “In addition, freight volumes are softer than the overall economy because of the current inventory overhang throughout the supply chain.”
Costello said he expected the sequential tonnage index would drop, noting that “these things tend to correct, and March took back more than half of the surprisingly large gain in February.”
Actual tonnage hauled, measured in the not seasonally adjusted index, was 142.1 in March, 10.2% better than February and by 2.5% on a year-over-year basis.
Dave Jackson, CEO at KnightTransportation, said April 20 that “the freight environment was less attractive in the first quarter of 2016 compared with the same quarter a year ago. We attribute the change to excess trucking capacity, higher inventory ratios and weak U.S. industrial production for the full quarter of this year.”
Inventory levels, which have been a concern for the past year, didn’t change in February compared with January.
“Inventories remain much too high, which is why truck freight volumes are even softer than overall economic growth,” Costello said in a report. “I’ll take no gain in February as a positive and hope that the inventory-to-sales ratio starts to [improve] in March.”
Retail sales were weak, particularly in the apparel sector. Factory output also didn’t improve, both on a month-to-month basis and a yearover-year basis.
On the other hand, housing and construction markets continue to be solid.
Ken Simonson, chief economist for the Associated General Contractors of America, told TT on April 19 that he expects the construction market will grow nearly 10% this year, on top of 11% growth in 2015 over the prior year.
“The outlook for single and multifamily housing remains positive,” he said as employment growth continues, wages are rising modestly and more Americans seek their own homes.
Construction particularly benefits trucking, Simonson said, because the building and furnishing process generates freight and relocations benefit the household goods sector.
Simonson, also a spokesman for the National Association for Business Economics, said that group’s forecast for the economy as a whole continues the familiar slow-growth pattern.
