October Freight Rises 6%
This story appears in the Nov. 29 print edition of Transport Topics.
Freight volume hauled by U.S. trucking companies hit a three-month high in October as it rose 6% from a year earlier, American Trucking Associations said Nov. 22.
The 11th consecutive year-to-year increase brought ATA’s seasonally adjusted tonnage index to a reading of 109.7, 0.8% higher than September. In September, tonnage increased 5.3% from September 2009, a larger gain than initially reported.
“October tonnage levels were at the highest level in three months, even after accounting for typical seasonal shipping patterns,” ATA Chief Economist Bob Costello said in a statement accompanying the tonnage figures. “These gains fit with reports out of both the manufacturing and retail sectors and show there is a little bit of life in this economic recovery.”
Tonnage levels for the first 10 months of 2010 were 6.1% higher than in the corresponding period in 2009, ATA said.
Two carriers reached by Transport Topics last week said that the roller-coaster spikes and slumps in demand seen over the summer have given way in recent months to slow, steady growth in demand for freight hauling services.
“It’s not robust demand, and it’s not stripping capacity in the marketplace yet,” said Keith Klein, executive vice president and chief operating officer of Transport America, Eagan, Minn. “I think in the long run that’s a good thing — a slow, steady recovery, as opposed to the ebbs and flows we saw in the second quarter.”
Klein said that Transport America hauled more freight and ran more miles in October than it did in either the previous month or in October 2009. The truckload carrier operates about 1,600 tractors, most of which are company-owned.
Regarding truckload capacity, Klein noted, “We’re close to equilibrium.” Nevertheless, some capacity tightness was discernible in the Midwest as of Nov. 23, when TT reached Klein by telephone.
Similarly, the head of a flatbed carrier in Tulsa, Okla., said that his company has “seen a slow, gradual recovery” in recent months.
That compares with periods of spotty growth during the summer, when “we turned down almost as much freight as we hauled,” said Bob Peterson, president of Melton Truck Lines.
“I think what happened in ’08 and ’09 is that people drew down inventories to unprecedented levels,” Peterson said. “As they gain confidence in the economy, there’s been restocking.”
Melton hauls mostly industrial goods. Peterson said that shipments of building materials, particularly those used for residential construction, remain depressed. Steel shipments, however, are in demand from the automotive and oil and gas industries, Peterson told TT.
Both Klein and Peterson said that they were optimistic that demand would remain relatively steady in the coming months, despite the imminent arrival of winter, which is historically a slow time of year for the trucking business.
“Things continue to be strong heading into the holiday, and hopefully that will continue,” Klein said. “I don’t know how Thanksgiving through Christmas is going to turn out, but we’re pretty optimistic.”
“We’re going into our four slowest months of the year, but this Thanksgiving, we have some of our customers working” on the Friday after the holiday, said Peterson. “Last year, they took darn near the whole week off. Things are clearly better.”
Other recent macroeconomic indications also revealed positive developments for the U.S. economy.
Revised figures from the Commerce Department, released on Nov. 23, showed that the U.S. gross domestic product grew at a 2.5% annual rate in the third quarter — higher than the 2% growth initially reported for the period.
The Association of American Railroads reported good news from the truck-rail intermodal sector. AAR said Nov. 19 that intermodal traffic for the week ended Nov. 13 was 232,888 trailers and containers. That was a gain of 11.9% compared with the same period a year ago.
Meanwhile, load board provider TransCore said Nov. 18 that pricing and demand are strong going into the holiday season, with October capping off a third consecutive month of strength in truckload spot-freight markets (click here for related story).
Sales of existing homes remained a sore spot for the U.S. economy, according to the National Association of Realtors. The group said Nov. 23 that sales of existing homes fell in October to an annual rate of 4.43 million, or 2.2% below the September level. Home sales create demand for movers’ services.
These economic indicators arrived after news of another sovereign debt crisis in Europe, where Ireland is seeking a bailout from the European Union and the International Monetary Fund. The news depressed U.S. equity markets early last week as Transport Topics was preparing to go to press.
