New Index Shows Improvement in Truck Freight During January

This story appears in the Feb. 22 print edition of Transport Topics.

Stronger readings in a new monthly freight index based on diesel purchases are adding to mounting evidence that truck freight in January continued the gradual improvement the industry has seen from the year-ago doldrums.

The January Pulse of Commerce Index, which includes data starting in 1999, rose for the first time since April 2008, Craig Manson, Ceridian Corp.’s senior vice president, told Transport Topics on Feb. 17.

Ceridian, owner of fuel-card vendor Comdata, and the University of California-Los Angeles created the index, which was published for the first time this month.

The three-month average, which is based on “swipes” by drivers using fuel cards issued by Comdata, climbed from 105.5 in December to 105.8 in January, equating to an annualized growth rate of about 3.3%, Manson said.

“The conclusions are pretty consistent; the Pulse of Commerce Index tracks industrial production very closely,” Manson said. He said he believes the index is a reliable economic indicator because it tracks freight moved with actual diesel purchases.

Comments from fleet executives at recent industry meetings also point to freight volume growth as 2010 unfolds.

“We certainly have a long way to go with shipping volumes, but we clearly have a better market in first quarter 2010 than we did in the first quarter 2009,” said John Steele, Werner Enterprises Inc.’s chief financial officer, in a presentation on Feb. 11.

Basing his comments on pre-booked loads, Steele said that the inventory drawdowns, or destocking, by customers that depressed first quarter 2009 volumes are not an issue now because inventories have been trimmed.

A Feb. 12 American Trucking Associations report highlighted the current level of inventory, which is at an 18-month low, as a promising sign for fleets that haul the freight needed to restock retailers and manufacturers.

Another positive indicator, ATA said, was the January rise in retail sales from December.

“Things are working in the right direction,” Landstar System CEO Henry Gerkens said Feb. 11, noting that load volume rose 17% in January.

“We’re starting to see some level of stabilization,” said Judy McReynolds, president of Arkansas Best Corp., noting that tonnage at the company’s ABF Freight System unit rose for the first time in three years on a month-by-month basis during December. That trend continued in January.

Another freight index and multiple other sources also signaled growing activity for freight markets.

The January Cass Information Systems Inc.’s Freight Index, which measures spending and shipments on freight bills paid by the banking company, showed freight spending rose 6% in January over the same month a year ago, and shipments increased 2%.

“Encouragingly, truck volumes are stable to improving in recent months, and this trend has continued year to date,” Robert W. Baird & Co. analyst Jon Langenfeld said in a Feb. 17 report.

Volume growth will be easiest to achieve early in the second quarter, Langenfeld said, because freight was so weak at that time last year.

Last April, ATA’s Truck Tonnage Index hit its lowest level since late 2001.

“The general consensus among the presenting carriers [at the BB&T Capital Markets Transportation Conference Feb. 10-11] is that rates have bottomed out and that demand is stronger than normally expected in the seasonal low months of January and February,” Richard Mikes, a managing partner at Transport Capital Partners, told TT.

A National Retail Federation report forecasting container shipping predicted a 25% increase, or 1.5 million standard container units, over the first half of 2009 at the 10 largest U.S. ports.

“Retailers are clearly expecting to move more merchandise this year,” NRF Vice President Jonathan Gold said. “Increases in import volumes don’t correspond directly with dollar volumes in sales, so caution has to be exercised when looking at these numbers.”

“There is still growth, but it is a little muted,” Manson said. “Things are getting better, but not enough for us to be confident that employment is going to turn around anytime soon.”

The Pulse of Commerce Index is seasonally adjusted, like economic data published by the Commerce Department, and is based on hundreds of millions of fuel-card swipes over an 11-year period at about 7,000 Comdata locations, Manson said.

It is adjusted to account for changes in the locations where the data are gathered and the companies that are buying the fuel, he explained.

The index doesn’t count transactions using other fuel cards and isn’t adjusted for changes in diesel engine fuel efficiency. Approximately, 100 gallons are pumped per transaction, Brett Rodewald, president of Comdata, told TT.