Tonnage Up 2.3% Year-Over-Year in July
For the third consecutive month, American Trucking Associations’ truck tonnage index rose on a year-over-year basis, signaling trucking may be heading toward brighter days, experts said.
In July, tonnage went up 2.3% year-over-year after seesawing in the winter and early spring.
On a sequential basis, the seasonally adjusted index grew 0.1% in July while reversing a 4.4% drop in June.
The preliminary seasonally adjusted index was 138.5 in July compared with 138.4 in June. Through July, the index was 1.2% higher than the same seven-month period last year.
The index uses a base level of 100 for freight activity in the year 2000.
The unseasonally adjusted index, which represents the change in tonnage actually hauled by the fleets, was 141 in July, which was 2.2% lower than in June 2017.
ACT Research Co.’s For-Hire Trucking Index also indicated that business conditions were much better in July than a year ago. The index is derived from a survey of trucking companies, and 50 is the dividing line between expanding or contracting economic conditions.
The volume index was 57.1 compared with 39.3 in July 2016. The pricing index rose from 44.3 to 60, capacity improved to 53.8 from 49.6 and productivity went up to 53.3 from 42.1 in July 2016.
“In a healthy market, carriers have pricing power and I think that’s what we’re seeing here. You’re seeing volume gains that are backed up by a spot pricing environment heading towards the North Pole when last year it was at the South Pole,” said Jim Meil, principal for industry analysis at ACT Research.
The DAT North American Freight Index was 515.1 in July. One year ago it was only 335.9. The base of the index is 100, covering the year 2000. DAT’s spot market loads grew 53% from 2016, although they are down 19% from June.
“In most years, July is a lull period before the fall shipping season gets going, but this summer has definitely been above average in activity,” said Mark Montague, DAT industry pricing analyst.
Some of the busiest freight movement, he said, was from Memphis, Tenn., to Indianapolis; Chicago to Buffalo, N.Y., and from multiple locations to Allentown, Pa.
“Remember we had Amazon Prime Day on July 11 and so there was a lot of trucking into the Northeast since Amazon has a lot of distribution centers there,” DAT Marketing Director Ken Harper added.
Sequentially, the national average van rate lost a penny to $1.79 per mile and the reefer rate dipped 4 cents to $2.08, but the flatbed rate rose 3 cents to $2.20.
The Cass Freight Index on shipments improved 1.4% and rose 4.5% on expenditures, marking the seventh consecutive month that both categories improved over year-ago levels. On a sequential basis, shipments fell 3.2% and expenditures went down 1.5%.
The Cass Truckload Linehaul Index increased 2.3% year-over-year to 125.3, the fourth positive month after 13 consecutive declines.
Cass uses information from freight bill payments through a St. Louis bank to calculate both indexes.
“Throughout the U.S. economy, we are continuing to see a growing number of data points suggesting that the economy continues to get incrementally better. Some data points are simply less bad, a few of them are much better,” wrote author Donald Broughton with Broughton Capital. “Unlike the May 2017 and June 2017 Shipments Index, which on a nominal basis exceeded the May 2015 and June 2015 levels, July 2017 fell back below July 2015 levels. This raises the potentially concerning question: ‘Is the strength in the recovery in freight volume beginning to wane?’”
It was October 2016 when the Cass Shipments Index broke a string of 20 months in negative territory, signaling a recovery in freight had begun, he said.
In other economic news, the Institute for Supply Management reported the Purchasing Managers Index dropped to 56.3% from 57.8% in June, although it was better than the 52.3% in July 2016. The index measures new orders, inventory levels, production, supplier deliveries and employment. The Federal Reserve’s Industrial Production Index rose to 105.5 compared with 105.3 in June and 103.2 in July 2016.
However, housing starts declined 4.8% sequentially and 5.6% year-over-year to a seasonally adjusted annual rate of 1.16 million units, according to the U.S. Census Bureau, a division of the Department of Commerce.
That agency announced retail sales improved 0.6% sequentially and 4.2% year-over-over in July, but the inventory-to-sales ratio deteriorated one-hundredth of a point to 1.38 for June, the latest month of available data.
“Retail sales surprised to the upside, but manufacturing production and housing starts were down, so combined those likely caused a rather flat month in July for truck tonnage,” said ATA Chief Economist Bob Costello.
Nevertheless, he predicted that economic growth will be better in the second half and to expect ATA’s tonnage index to continue to outperform 2016 results.
