November Tonnage Dips 3.5%

This story appears in the Jan. 11 print edition of Transport Topics.

U.S. truck tonnage declined 3.5% in November from the corresponding month of 2008, but it still was the best year-over-year showing in 12 months, according to American Trucking Associations. Total tonnage grew 2.7% from October’s levels.

Some truckers agreed that freight volume was growing and several analysts said the ATA report was consistent with other data showing a steady, if slow, improvement in the U.S. economy.

ATA said the November gain boosted its seasonally adjusted index to 106.4 from 103.6 in October, its highest level in a year. ATA uses tonnage in the year 2000 as the index base of 100.

“Slowly, but surely, truck freight has started the recovery process, and November’s solid increase is a very positive sign,” ATA Chief Economist Bob Costello said in a Dec. 29 statement.

Costello said November tonnage was pushed higher by improved economic activity, including the replenishment of depleted inventories.

“We now have evidence that . . . inventories are in much better shape, which will not be such a drag on truck freight volumes,” Costello added.

Another key economic indicator showed manufacturing growth: The Institute for Supply Management said Jan. 4 that its PMI index rose to 55.9 in December, the highest reading since registering 56 in April 2006.

“We definitely have seen a steady increase of freight that started in July and continued through the end of year,” Marc Rogers, general manager of Schneider Regional Truckload, told Transport Topics. “We saw much more of a traditional holiday season from a surge viewpoint. We’re much more optimistic than we were last year.”

Although FedEx Corp. declined to comment on the ATA index, the company’s latest earnings report cited growing freight volumes.

Owner-operators and small fleets said they saw less improvement in the period.

“We’ve been hearing comments over past months that business volumes are picking up and guys are being offered more loads than previously,” Todd Spencer, executive vice president of the Owner-Operator Independent Drivers Association, Grain Valley, Mo., told TT.

“This increased demand hasn’t shown up in higher rates,” Spencer said.

David Owen, president of the National Association of Small Trucking Companies, was even less optimistic.

“Possibly, the number of actual available loads has increased a nudge, and Christmas may have been a nudge better because inventories were so low,” Owen told TT.

Some trucking analysts said their own data was moving in the same general direction as the ATA index.

“We view the ATA tonnage index as most valuable when looked at over a period of months,” Todd Fowler, transportation analyst at KeyBanc Capital Markets Inc., Cleveland, told TT. ATA’s index “jibes with what we’re seeing, a gradual recovery in truck volumes after bottoming in the first quarter of 2009.”

Fowler added that KeyBanc saw inventory levels across the entire economy in 2010 “as very lean” because retailers “overshot their de-stocking.”

“We wouldn’t expect to see the same de-stocking as in early 2009, so it sets up for nice replenishment,” Fowler added.

Chris Brady, president of Commercial Motor Vehicle Consulting, Manhasset, N.Y., told TT that retailers and wholesalers “are starting to replenish inventories, and combined with the upturn in industrial production that the Institute of Supply Management announced this week, we’re starting to see freight flow to the supply chain.”

“The numbers look good,” Eric Starks, president of truck consulting firm FTR Associates, Nashville, Ind., told TT. He said he expected much more growth next year.

“We’re starting to see production take off right across the board,” Starks said. “By and large, things are starting to turn a corner. The manufacturing index that just came out was also very strong. If it had been over 60, that would have been a very hot pace, hard to sustain, but now, things are healthy, moving at a modest pace upward.”

But ATA’s Costello was cautious, saying the industry “should not get overly excited about the sizeable increase in November. . . . Both the economy and truck tonnage will exhibit starts and stops in the months ahead, but the general trend should be for moderate growth.”