Truck Tonnage Falls 1.2% in November
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Truck tonnage slipped in November as the industry’s freight recession lingers, but conditions are poised to ease heading into next year, American Trucking Associations said with the release of its For-Hire Truck Tonnage Index for the month.
“We continued to see a choppy 2023 for truck tonnage into November,” ATA Chief Economist Bob Costello said in the Dec. 19 release.
The index fell 1.2% to 113.7 compared with 114.7 in November 2022. On a sequential basis, the index fell 1% from 114.9 in October.
“It seems like every time freight improves, it takes a step back the following month,” Costello said. “While year-over-year comparisons are improving, unfortunately, the freight market remains in a recession. Looking ahead, with retail inventories falling, we should see less of a headwind for retail freight, but I’m also not expecting a surge in freight levels in the coming months.”
Costello
November’s number marked the ninth straight year-over-year decrease. In October, the index was down 2.4% from a year earlier.
In calculating the index, 100 represents 2015. ATA’s For-Hire Truck Tonnage Index is dominated by contract freight as opposed to spot market freight.
The National Retail Federation in a Dec. 14 report said it expects the holiday shopping season to meet expectations with a 3% to 4% increase from 2022 and total spending to reach a record between $957.3 billion and $966.6 billion.
“Jobs and wage gains together with falling energy prices have supported holiday shopping as we predicted,” National Retail Federation Chief Economist Jack Kleinhenz said. “Lower inflation for goods has helped savvy consumers make smart decisions about holiday purchases. The year-over-year comparison shows spending is on track to meet our projection for a sound holiday shopping season.”
The NRF said core retail sales were up 3.3% year-over-year on a three-month moving average as of November and 3.7% for the first 11 months of the year. Core retail sales do not include sales at automobile dealerships, gasoline stations and restaurants.
Meanwhile, the November Logistics Managers Index recorded a reading of 49.4 compared with 53.6 a year ago and 56.5 in October. The LMI combines inventory levels and costs, warehousing capacity, utilization, prices and transportation capacity. The November reading indicated that the transportation sector is contracting; a reading above 50 indicates that logistics is expanding; a reading below 50 indicates a shrinking logistics industry.
#SuperSaturday marks the final major shopping holiday of the year. https://t.co/vrpqV6faxt pic.twitter.com/nOKkreDmPI
— National Retail Federation (@NRFnews) December 13, 2023
One of the index’s authors, Arizona State University business professor Dale Rogers, said while the index dipped year-over-year and month-to-month, he and the other educators who compile the report are not overly alarmed since there are specific reasons for the decline.
“The road to recovery is not always linear — something that is clearly evidenced by the backward step the Logistics Managers’ Index took this month,” Rogers said. “The 7.1-point drop is the largest since the start of the downturn in April 2022. However, the reason behind this decline is much different from the one from 19 months ago. November’s dip was largely triggered by a decline in inventory levels, which is attributable to Q4 holiday sales and the subsequent dips in warehousing capacity and transportation capacity and a slowdown in warehousing utilization and transportation utilization. We saw a similar decline in utilization metrics back in April 2022, but in that instance, it was because inventories were holding still.”
Rogers noted the decline was propelled by motivated businesses.
“Essentially, November’s decline seems to have come because firms are selling off inventories quickly,” he noted. “The previous large decline from April 2022 happened because firms had too much inventory and couldn’t sell any of it. Both of these scenarios led to large drops in the overall LMI, but this more recent drop is significantly less concerning.”
The LMI is produced 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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The monthly Truckload Volume Index from DAT showed that a post-Thanksgiving surge in truckload freight volumes made for a solid November overall compared to previous years.
“Thanksgiving and Black Friday were early in the month, which meant there was almost a full week of shipment activity after the holiday,” DAT Chief of Analytics Ken Adamo said. “Businesses running leaner inventories compared to the last couple of years are taking advantage of lower transportation rates as they position goods ahead of peak retail shopping.”
That said, the three equipment types tracked by DAT all recorded declines. The Van TVI was down 9.0% to 232, while the Refrigerated TVI was down 3.5% to 191. The Flatbed TVI was down 11.1% to 232.
DAT said shippers continued to benefit from ample truckload capacity. “For every 10 carriers that left the market in November, eight new ones came in,” Adamo said. “There’s been an acceleration of capacity out of the longhaul freight sector, where carriers are subject to spot-rate volatility and high diesel costs, and a shift back to other parts of the economy, like regional dedicated operations.”
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