Truck Tonnage Slips 1.3% in May
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Truck tonnage in May continued its downward year-over-year trend, dipping 1.3% when measured against the same month in 2022. However, on a month-to-month basis, the index increased a seasonally adjusted 2.4% and the index jumped to 115.4 compared with 112.7 in April.
Still, American Trucking Associations Chief Economist Bob Costello says the industry remains in a slump compared with the height of the COVID-19 pandemic when freight transport was red hot, moving personal protective equipment for medical professionals, the vaccine, food and items for people working at home.
“Tonnage had a nice gain in May, but remains in recession territory,” Costello said. “The 2.4% gain didn’t erase the 4.5% total drop the previous two months. Additionally, tonnage continues to contract from year-earlier levels as retail sales remain soft, manufacturing production continues to fall from a year ago and housing starts contract from 2022 levels.”
Costello pointed out that May’s year-over-year decline was the third consecutive month in which the index has dipped when measured on that basis. In April, the index fell 3.4% compared with 2022.
Costello
The federation calculates the tonnage index based on surveys from its membership and has been doing so since the 1970s.
According to ATA, trucks hauled 10.93 billion tons of freight in 2021. Motor carriers collected $875.5 billion, 80.8% of total revenue earned by all transport modes.
This is a preliminary figure and subject to change in the final report issued around the fifth day of each month. The report includes month-to-month and year-over-year results, relevant economic comparisons and key financial indicators.
Meanwhile, the Logistics Managers Index in May fell into recession territory, declining for the third consecutive month. In reaching an all-time low in its 6½-year history, the index showed the economy contracting at 47.3.
The economists who compile the LMI every month say a reading above 50 shows economic growth. Below that, the economy is retracting.
The index’s year-over-year decline shows how much the economy is slowing when in May 2022 the index reading was 67.1.
Arizona State University business professor Dale Rogers, an author of the index, said the economy has clearly shifted from one dominated by goods to being more balanced with services.
“Consumers continue to spend on services like dining as well as on items like apparel and cosmetics. Big-ticket items, however, continue to be slow, with demand for items like furniture, high-end electronics, and DIY construction materials being quite low relative to the last few years,” Rogers wrote. “We also see that demand for higher-end apparel and accessories has slowed, with demand shifting to lower-cost goods.
Rogers
“This is reflected in the simultaneous slowdown in sales at places like Macy’s and ramp-up at Walmart and BJ’s Wholesale Club. Essentially, anything tied to the housing market or something with a large interest rate remains slow, while consumables and lower-end items, such as those sold in dollar stores, continue to chug along.”
Researchers at Arizona State, Colorado State University, Florida Atlantic University, Rutgers University and the University of Nevada-Reno compile the report each month in conjunction with the Council of Supply Chain Management Professionals.
Rogers said he and his team are closely watching the Federal Reserve and how it chooses to fight inflation, and that will be a key point for the economy and whether it shows growth later this year.
“The overall economy continues to be a product of shifting interest rates. The Federal Reserve has signaled that they will pause their cycle of interest rate increases at their June meeting,” Rogers said. “It should be pointed out that the current interest rates of 5.25% are lower than the 5.5% rates that [Fed Chair] Jerome Powell thought would be required to get inflation down to 2%”.
A third index also points to a changing trucking economy, but Ken Adamo, DAT Solutions chief of analytics, said falling rates for contract freight dipped for the seventh consecutive month for van and refrigerated cargo.
“Shippers are taking advantage of abundant truckload capacity to establish new contract rates at substantial savings compared to 2022, and to make strategic use of the spot market,” Adamo said. “We expect these trends to continue through the end of the year.”
Adamo said month-over-month, the van and reefer Truckload Volume Index numbers rebounded from their lowest points since February 2021.
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The van ratio was up to 2.5 from 1.9 in April, meaning there were 2.5 loads for every truck on the DAT One marketplace.
The refrigerated ratio was up to 3.6, from 2.7, but the flatbed ratio was down to 11.7 from 12.1.
“This was the second-best May on record for van and reefer freight, according to our TVI,” Adamo said. “There was demand to move seasonal goods at a time when the truck supply on the spot market tightened due to the International Roadcheck inspection event, the Memorial Day holiday and general carrier attrition.”
