Truck Tonnage Hurt by Late Winter Storms in March
Truck tonnage rose 0.7% last month compared with March 2016, although the American Trucking Associations’ chief economist said that late winter storms hurt the index compared with this past February.
On a sequential basis, ATA’s tonnage index fell 1% in March after a 0.1% decline in February.
The preliminary seasonally adjusted index was 137.5 in March compared with 138.7 in February. The all-time high in February 2016 was 142.7. The index uses a base level of 100 for freight activity in the year 2000.
“Despite last month’s dip, seasonally adjusted tonnage rose 1.2% during the first quarter overall from the previous quarter and increased 0.2% from the same quarter last year,” said ATA Chief Economist Bob Costello.
The not seasonally adjusted index, which represents the change in tonnage actually hauled by the fleets, was 143.9 in March, which was 14.6% above the February total.
The DAT North American Freight Index surged 58% to 489 in March compared with 2016 levels due to more freight demand, although spot market truckload rates only slightly improved. DAT uses a base level of 100 for spot market activity in the year 2000.
The national average spot rates for dry and refrigerated vans went up a penny to $1.63 per mile and $1.87 per mile in March, respectively, compared with February. The average flatbed rate increased 6 cents to $2.03.
“Rates rose in the last week of March, as shippers rushed freight out to end the quarter on a high note, but that was not enough to offset soft market conditions from early March,” Don Thornton, DAT senior vice president.
Demand for flatbed trucking remained strong in March for the construction and energy sectors. Flatbed load posts rose 45% while truck posts increased 6% compared with February. The load-to-truck ratio for flatbed rose to 36.6 — a measurement of the number of flatbed loads for each truck on the DAT network — a 109% gain over March 2016.
Dry van posts increased 47%, and truck posts rose 13% in March on a sequential basis, for a national average van load-to-truck ratio of 3.2. Refrigerated loads jumped 49%, and truck posts increased 14% for load-to-truck ratio of 6.2.
DAT defines a ratio benefiting a carrier as about 18 for flatbed, 5.5 for dry van and 12 for refrigerated. However, DAT industry analyst Mark Montague said the ratios have doubled from March 2016. One year ago, the load-to-truck ratio was 17.6 for flatbed, 1.6 for dry van, and 3.1 in refrigerated.
Montague tied the depressed spot market rates to the drought in California this winter and a shift toward the petrochemical industry in Texas, Louisiana, Arkansas and Missouri, which has rebounded as crude oil prices returned to about $50 a barrel.
“The California drought has meant less long-distance freight, and that forces more capacity into Texas and states to the east. It boosts capacity beyond what would normally be on the market to an extent that rates remain lower even as the number of loads have increased,” he said on a conference call hosted by Stifel, Nicolaus & Co.
Other economic indicators affecting the trucking industry were generally mixed in March.
The Institute for Supply Management manufacturing index was 57.2%, down from 57.7% in February, the group said. A reading of more than than 50% indicates that manufacturing is expanding, less than that indicates contracting. Out of 10 categories, five improved and five declined, including a decline to 57.6% from 62.9% sequentially in production.
The Commerce Department reported housing starts dropped 6.8% sequentially to a seasonally adjusted annual rate of 1.22 million homes, although the figure was up 9.2% from March 2016. The number of building permit applications rose 3.6% sequentially. The agency also reported retail sales in March dropped 0.2% sequentially and rose 5.2% year-over-year.
“While I’m not expecting a surge in truck tonnage anytime soon, the signs remain mostly positive for freight, including lower inventory levels, better manufacturing activity, solid housing starts and good consumer spending,” Costello said. “As a result, we can expect moderate growth going forward.”
