Truck Tonnage in December Dips 0.5% Year-Over-Year
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Truck tonnage dipped in December, closing out the worst 12 months for freight activity since the pandemic year of 2020, American Trucking Associations reported.
The ATA For-Hire Truck Tonnage index fell 0.5% to 115.7 from a year ago, the federation announced Jan. 23. On a month-to-month basis, the index rose 2.1% from 113.7 in November, offering a glimmer of hope that trucking is fighting its way out of a stubborn freight recession.
“While 2023 ended on a better note, truck tonnage remained in a recession as it continued to fall on a year-over-year basis,” ATA Chief Economist Bob Costello said. “With that said, for-hire contract freight, which is what comprises our index, in December was 2.6% above the trough in April.
“For the entire year, tonnage contracted 1.7% from 2022 levels. This makes 2023 the worst annual reading since 2020, when the index fell 4% from 2019, and the only year since 2020 that tonnage contracted.”
December marked the 10th consecutive year-over-year decrease, albeit the smallest, ATA noted. In calculating the index, 100 represents the year 2015.
Costello
The monthly gain likely was boosted by holiday spending. The National Retail Federation and other organizations said shoppers spent $964 billion in November and December, coming in slightly higher than NRF’s expectations. Meanwhile, the December Logistics Managers’ Index moved back into positive territory at 50.6. Year-over-year, the index was down from 54.6, but was up from 49.4 compared with November.
“As is always the case in December, movements in the logistics industry were driven by holiday shopping,” Arizona State University business professor Dale Rogers said in the report. “The strength shoppers showed with online shopping continued throughout the holiday shopping season, with U.S. retail sales up 3.1% from Nov. 1 to Christmas Eve. Online retail — which requires more trucks and warehouses located close to consumers — was a major part of this activity, with growth of 6.3%.”
Rogers
Researchers at Arizona State University, Colorado State University, Florida Atlantic University, Rutgers University and the University of Nevada-Reno, in conjunction with the Council of Supply Chain Management Professionals, compile the report. It consists of eight unique components: inventory levels, inventory costs, overall warehousing capacity, warehousing capacity utilization, warehousing prices, overall transportation capacity, transportation capacity utilization and transportation prices.
A reading above 50 indicates expansion; a reading below 50 indicates a shrinking logistics industry.
Rogers said trends indicated consumers believe the economy is stabilizing.
“This spending was spurred in part by inflation continuing to drop,” Rogers added. “Wall Street has taken this as a sign that interest rates will almost assuredly come down over the next year as all major indexes have now been up for eight consecutive weeks.”
DAT Analytics, based in Beaverton, Ore., said Jan. 17 that trucking in December saw spot truckload rates rise, and the gap between spot and contract van rates closed to its narrowest point since March 2022. DAT said a convergence of spot and contract rates would signal an end to the current cycle of falling prices for truckload services.
“At 39 cents, the spread between spot and contract van rates is still substantial but was down 7 cents compared to November,” DAT Chief of Analytics Ken Adamo said. “The price to move van freight under contract hit its lowest point in nearly three years. Entering 2024, shippers are in a strong position as they negotiate contract rates, and carriers on the spot market are optimistic that the market will turn.”
DAT said spot linehaul rates, which subtract an amount equal to an average fuel surcharge, increased for all three equipment types compared with November:
- Linehaul van rate: $1.65 per mile, up 7 cents
- Linehaul refrigerated rate: $1.98, up 4 cents
- Linehaul flatbed rate: $1.87, up 4 cents
Dhawan
Rajeev Dhawan, director of the Economic Forecasting Center at Georgia State University, told Transport Topics that he believes the economy will slow this year as consumers pull back on spending online and in-store. Against that backdrop, he foresees the Federal Reserve taking aggressive action to cut interest rates — possibly in the year’s first half.
“The freight recession [occurred] because people aren’t buying as much, and you can see that in the numbers from the ports and what’s going on with the containerships,” he said. “I will tell you the gross domestic product growth rate in 2024 will be 1%, or 1½% for the full year, and it will be up and down quarter-to-quarter.
“It won’t be a recession, but this will be a growth stall. The interest rate cuts are coming in 2024 and will make an impact. Chairman [Jerome] Powell gave us a signal, and if the Fed is going to do a rate cut, it will not be puny. The quarter-point cuts need to go big, and they will come in early. Do it fast; do it aggressively. These cuts will help the mortgage and car markets in the long run.”
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