September Tonnage Rises 5.5% Year-Over-Year

Traffic on a California interstate. (David Paul Morris/Bloomberg News)

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Truck tonnage in September increased 5.5% when measured against the same month a year ago, and on a sequential basis it rose 0.5% from August, according to American Trucking Associations.

September’s index of 118.8 compared with 118.2 in August. (It equaled 100 in 2015.)

The federation’s For-Hire Truck Tonnage Index is dominated by contract freight as opposed to spot market freight.

ATA released the index Oct. 18, and said the latest gain put tonnage at the highest level since August 2019 and the third-highest level on record.

“This is another example of how the contract freight market remains strong despite weakness in the spot market this year,” ATA Chief Economist Bob Costello said. “During the third quarter, tonnage increased 0.5% over the second quarter while increasing 5.6% over the same period in 2021. That was the largest quarterly year-over-year increase since the second quarter of 2018.”

The September increase is the 13th consecutive year-over-year gain. In August, the index was up 6.7% from a year earlier.

For the first nine months, tonnage was up 4% compared with the same period a year ago.

ATA Truck Tonnage Index Rose 0.5% in September https://t.co/8nYCLDQVoK

— Bob Costello (@ATAEconBob) October 18, 2022

ATA separately found truck freight experienced a slight rebound last year in a report Oct. 19. American Trucking Trends 2022 stated the industry moved 10.93 billion tons of freight in 2021 compared with 10.23 billion the previous year. The industry collected 80.8% of the nation’s freight bill, up slightly from the previous year, while generating $875.5 billion.

“ATA believes in data-driven policymaking, and Trends consistently provides accurate and up-to-date information so industry leaders can base their decisions on the best data available,” ATA President Chris Spear said. “Trends is a trusted source of information on our industry and the economy, and that is why it is found on the desks of countless elected officials, regulators and industry executives across the country.”

The report also found 7.99 million people were employed in industry-related jobs, up 340,000 from the previous year, including 3.49 million professional truck drivers. Women made up an all-time high of 7.9% of the nation’s drivers. Minorities account for 46.1% of truck drivers. Trucking remains a small-business industry with 95.7% of fleets operating 10 or fewer trucks. 

Trucking serves as a barometer of the U.S. economy, representing 72.2% of tonnage carried by all modes of domestic freight transportation, including manufactured and retail goods. Trucks hauled 10.93 billion tons of freight in 2021. Motor carriers collected $875.5 billion, or 80.8% of total revenue earned by all transport modes. Before seasonal adjustment the index equaled 119 in September, 3.8% below the August level of 123.

ATA calculates the tonnage index based on monthly surveys from its membership.

While the ATA’s truck tonnage number showed year-over-year and month-over-month growth, the third-quarter U.S. Bank Freight Payment Index showed a 4.9% year-over-year contraction when measured against the same period in 2021. When measured against the second quarter of 2022, the drop was 2.6%, according to the index, which was released Oct. 19.

U.S. Bank said the index’s decline is the steepest quarterly drop in shipments since the first three months of 2021.It would have been even steeper except that a strong uptick in freight activity during the quarter in the Southwest region of the country prevented that from happening. Volume there jumped 5.8% from the second quarter and 6.6% year-over-year. The Midwest region had the largest drop from the second quarter at 4%, and it was down 3.5% year-over-year.

The report also said that spending by shippers also contracted in the third quarter, dropping 2.4% compared with the second quarter. U.S. Bank noted that this is only the second quarterly decrease in spending since the third quarter of 2020. 

“Lower freight volumes, as well as dropping diesel prices in the quarter, led to linked-quarter spending contraction.” said Bobby Holland, U.S. Bank vice president and director of freight data solutions. “Even with the third-quarter dip, spending by shippers is still at near-record levels for the history of our index.” 

According to the U.S. Census Bureau, one possible explanation for the freight decline in the Midwest may be the 15% decline in new home construction when measured against the same period in 2021. 

ATA’s Costello said he agrees with the U.S. Bank report that lower new home construction in the region is impacting freight, and he saw some bright spots in that report. 
“High levels of oil production in the Southwest, as well as strong truck freight volumes in Mexico, helped avoid a much worse quarter for shipments,” he said. 

The monthly Logistics Managers Index in September showed positive growth month-to-month, despite being down significantly year-over-year. The LMI came in at 61.4 compared with 72.2 a year ago. When measured against August, the LMI was up from 59.7.

One of the index’s authors, Arizona State University business professor Dale Rogers, said the month-over-month increase was sparked by the logistics and warehouse sector, which saw a 67.1% increase in prices compared with a year ago, while the LMI’s specific transportation index slumped 27.3% when compared with 2021 levels. 
“It was the best of times, it was the worst of times” is the opening quote of Charles Dickens’ ‘A Tale of Two Cities,’ but in September 2022 this could also be applied to the LMI, and the massive differences we see between our warehousing and transportation metrics,” Rogers said. “Transportation continues its slump, while warehousing is chugging along at the same breakneck pace we have observed for much of this post-pandemic recovery period.” 

The LMI combines inventory levels and costs, warehousing capacity, utilization, prices and transportation capacity. A reading above 50 indicates that logistics is expanding; a reading below 50 indicates a shrinking logistics industry.

The LMI is put together by business and logistics professors at universities including Arizona State University, Colorado State University, Rochester Institute of Technology, Rutgers University and the University of Nevada-Reno, in conjunction with the Council of Supply Chain Management Professionals. 

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