Truck Tonnage Gains 3.1% in September; Overall Growth Remains Uneven, ATA Says

Truck tonnage rose 3.1% in September from a year earlier, American Trucking Associations reported, signaling further expansion in a freight market where growth patterns have been uneven this year.

The trade group’s advanced seasonally adjusted index reached 135.1 last month, showing year-over-year growth that exceeded August’s 2.1% improvement, ATA reported Oct. 20.

On a month-to-month basis, September tonnage gained 0.7% from August of this year but fell 0.9% from July to August. The up-and-down pattern has continued throughout 2015, with alternating increases and declines in every month since January. September was the fifth increase out of nine reports.

“The seesaw pattern in truck freight tonnage continued again in September, except that the gain didn’t fully wipe out August’s decline” ATA Chief Economist Bob Costello said.

Costello stressed an upward trajectory for the index.

“Over the last few months, tonnage has snapped back from softness this past spring and early summer, and is approaching the record high,” he said.

The all-time high for the index was 135.8, set in January of this year. For 2015 to date, tonnage was up 3.3% from the same point last year.

With the latest increase, tonnage has topped the year-earlier period for 33 straight months. That extended string of tonnage growth still is shorter than the 34 consecutive months of increases after the recession ended late in 2009.

Publicly traded fleets’ commentary in third-quarter earnings reports echoed the diverse patterns Costello identified.

Werner Enterprises said its business was “similar to historical standards and not as strong as the robust freight markets during the same periods of 2014.” Marten Transport said freight markets were “soft,” Knight Transportation chose “lukewarm” and Covenant Transportation Group said “lackluster.”

Werner, Marten and Covenant rank Nos. 16, 48 and 46, respectively, on the Transport Topics Top 100 list of the largest U.S. and Canadian for-hire carriers.

Costello expressed some worries about underlying markets.

“I remain concerned about the high level of inventories throughout the supply chain,” Costello said. “We recently learned that inventories throughout the supply chain and relative to sales, rose slightly in August, which is not a good sign. This could have a negative impact on truck freight volumes over the next few months.”

Others offered similar commentary.

The uneven U.S. economy is being reflected in trucking, said Eric Starks, president of consultant FTR, who also observed that 3% growth is a “healthy” pace.

“Freight data is very inconsistent,” he told TT last week. “Housing is pretty decent, and automotive has been hitting on all cylinders. If the consumer was scared and running in the opposite direction, would they be spending on new autos? The answer clearly is ‘no.’ ”

Autodata Corp. reported auto sales so far this year are 5% ahead of 2014, and housing starts have risen nearly 15%, according to the Commerce Department.

On the other hand, Starks said consumer buying patterns have been “choppy” for the past two months, marring progress in a sector that accounts for 80% of trucking business.

He also said, “There is a lot of inventory out there, and there is not significant pressure to move goods immediately because of that.”

Industrial production, another driver of trucking freight, has been flat all year, Starks added, because “businesses are on the sidelines and not willing to spend right now.”

Financial analyst Robert Salmon at Deutsche Bank also noted divergent patterns, including recent tonnage growth above historical levels.

“We remain cautious about the near-term outlook for freight demand given elevated inventories, which have been growing faster than sales at retailers, manufacturing companies and wholesalers,” he said. “The consumer was resilient and remains one of the few bright spots for freight demand.”

DAT Solutions analyst Mark Montague told TT that load board activity continues to be muted.

However, he noted that there still are some “mildly hot spots,” such as flatbed markets in the Southeast and Southwest that are being helped by housing and auto demand. The drop-off in energy exploration, however, has hurt flatbed fleets there.

Housing growth is helping Pacific Northwest flatbed activity, he added.

In general, however, there is no shortage of capacity this fall, Montague said, in comparison with last year’s tightness.

For example, he said, capacity is adequate in Michigan and upstate New York for apple harvests, in contrast to the usual tightness there at this time of year.

Montague also noted that freight markets are close to balanced.

“Tightness can reoccur if there is much of a change in demand,” he said. “Although capacity is loose, there are limits to how loose it is.”

ATA’s not seasonally adjusted index ended September at 138.9, or 1.4% above August 2015 and 2.3% better than September of last year.