Tonnage Numbers Mixed for February
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Truck tonnage recorded a 12th consecutive year-over-year decline in February while managing a respectable month-to-month gain, a mixed result for an industry seeking signs of an eventual emergence from its widespread freight recession.
The American Trucking Associations monthly For-Hire Truck Tonnage Index showed tonnage slipped 1.4% year-over-year to 116.0. However, the result marked a 4.3% increase over January’s reading of 111.3, the federation said March 19.
Despite the positive month-to-month news, ATA Chief Economist Bob Costello said there remains much room for improvement in the industry.
“After a very soft January, due in part to winter storms, truck tonnage snapped back in February,” Costello said. “February’s level was the highest in a year, yet the index still contracted from a year earlier, suggesting truck freight remains in a recession.”
Costello
The ATA index is dominated by contract freight rather than spot market freight. In calculating the index, 100 represents 2015.
The monthly Logistics Managers’ Index likewise showed a sequential gain, with February rising 0.9% to 56.5 from January’s reading of 55.6. On a year-over-year basis, the February number marked a 3.3% improvement from a year-ago reading of 54.7. Last month’s result also tied with October 2023 for the highest reading for the overall index in the past 12 months. The growth was bolstered by expansion in all eight sub-metrics captured in the index for the second month in a row, LMI said.
Rogers
“This is the sixth time in the last seven months that the LMI has shown expansion,” said Arizona State University Professor of Business Dale Rogers, an author of the report. “This growth is driven by continued progress in transportation and the buildup of inventories upstream at the manufacturing and wholesale levels. The overall index is up, but still below the all-time average of 62.4, which in many ways epitomizes the current slow but positive and steady state of the U.S. economy.”
Rogers pointed to several trends that have helped improve the U.S. economy in the post-COVID recovery stage.
“One of the factors behind the strong U.S. economy is immigration,” Rogers said. “Net immigration from August 2022 to July 2023 was the highest since 2017, and immigrants now make up 18.6% of the labor force in the U.S., which has been a relief to some businesses that struggled with labor during the pandemic years. This is largely driven by tripling in refugees who have been granted asylum and quickly entered the labor force.”
This trend is bolstered by increased domestic energy production, Rogers added.
“The U.S. has continued to be a net exporter of energy,” he said. “While it may be politically complicated, abundant labor and abundant energy is a combination that is unique to the U.S. and is likely a major factor behind the increased pace of economic recovery seen in the U.S. relative to other developed nations.”
Every month, researchers at Arizona State University, Colorado State University, Rochester Institute of Technology, Rutgers University and the University of Nevada-Reno assemble the report in conjunction with the Council of Supply Chain Management Professionals. An LMI reading above 50 indicates the logistics sector is expanding; a reading below 50 indicates a contraction.
(February Freight Forecast: U.S. Rate and Volume OUTLOOK Update) - Leading Indicators Suggest a 2024 Trucking Recovery
— ACT Research (@actresearch) February 29, 2024
Read more: https://t.co/PRmqYxbQJj#freight #logistics #TL #LTL #shipping #trucking #transportation, #ACTResearch, #ACT pic.twitter.com/kaKChOIe6d
In its monthly Freight Forecast, ACT Research projected that the freight industry could show improvement in the second and third quarters.
“With January freight volumes slowed by weather, we see signs the next few seasonally soft months could turn above trend as shippers work to make up lost volumes,” ACT Research Senior Analyst Tim Denoyer wrote. “The truckload CEOs we interviewed at ACT’s seminar on February 21 are seeing volumes improve enough to get more selective on freight mix, but this demand is not finding its way into the spot market yet.”
Denoyer added, “The January surge in rates following the extreme cold mostly reversed quickly as temperatures rose into seasonal market softness, but in late February, seasonally adjusted spot rates were still at six-month highs, excluding the cold snap.”
Several ports, including Los Angeles and Long Beach — two of the nation’s biggest — reported strong January and February container volume. Officials there believe this is a sign of an improving economy.
Payroll employment rises by 275,000 in February; unemployment rate increases to 3.9%#JobsReport #BLSData https://t.co/ZwrVfLviqL
— BLS-Labor Statistics (@BLS_gov) March 8, 2024
In February, U.S. employers reported another healthy month of hiring, adding 275,000 jobs and offering an indication of the U.S. economy’s resilience in the face of high interest rates. Last month’s job growth was up from a revised gain of 229,000 jobs in January.
Also, while the February unemployment rate ticked up two-tenths of a point to 3.9% it was still the 25th straight month in which it has remained below 4%.
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