Truck Tonnage Again Sets Record as September Loads Jump 8.4%

This story appears in the Oct. 28 print edition of Transport Topics.

U.S. truck tonnage increased 8.4% in September from year-ago levels, setting another record on the strength of increased automotive, housing and oil-and-gas industry loads.

The freight index, which is compiled by American Trucking Associations, also set a record in August, when it rose 6.9% from 2012.

September’s gain was the largest percentage increase for the seasonally adjusted index since December 2011, as measured on a year-over-year basis.

Month-to-month, the tonnage index rose by 1.8 points to 128.7 from 126.9 in August. ATA uses business volume in 2000 as a base level of 100.

“I continue to be pleasantly surprised by the strength of truck tonnage,” said Bob Costello, ATA’s chief economist and the report’s author.

“I attribute a part of tonnage’s robustness to the sectors of the economy that are growing fastest, like housing construction, auto production and energy output. These industries produce heavier-than-average freight, which leads to faster growth in tonnage versus a load or shipment measure,” he added.

Year-to-date, the tonnage index has grown by 5.4% relative to the first nine months of 2012. In contrast, the number of loads hauled has only grown by about 0.5%, Costello said.

Fleet executives said tonnage is improving, but that it is harder to haul it efficiently because of the federal hours-of-service rule for commercial drivers that started July 1.

Truckload carrier Werner Enterprises said in its third-quarter earnings statement released Oct. 17 that its ratio of loads-to-trucks improved from the third quarter of 2012.

But despite that improvement, the company’s miles per truck declined, reflecting the results of HOS rule changes and the accelerating driver shortage. Average monthly miles per truck declined by 3.5% during the quarter compared with the same time last year, Werner said.

“As expected, the company believes that these hours-of-service changes negatively impacted miles per truck by 2% to 3%,” the company said.

Cameron Holzer, president of the expedited division of CRST International, added that, “The demand for assets is growing. There is a feverish need for capacity.”

Holzer’s unit uses driver teams to move longhaul loads quickly. Retailers are big customers, as are some less-than-truckload carriers that farm out their linehaul movements to him.

CRST is a diversified transportation provider offering flatbed, dedicated contract carriage and specialized services, in addition to expedited loads. Holzer said all of the corporation’s divisions are benefiting from improved demand.

He agreed with Werner that the HOS rule changes are making it difficult. To cope, CRST rolled out the largest driver pay increase in its 58-year history Oct. 15.

Forward Air Corp. also does expedited work, and it said in its Oct. 21 earnings report, “Our sense is the improved tonnage is driven by a slightly better macro environment as well as share gains.”

Bruce Campbell, Forward’s chairman and CEO, said, “We are pleased to report that thus far into the fourth quarter, this trend has continued.”

Flatbed hauler Davis Transport has had to turn down some business when it is offered on short notice, company President Jim McKinny said.

“We enjoyed a really good summer. There seems to be more demand,” McKinny said. His company moves lumber longhaul from west to east and manufactured metal products, especially pipes, from east to west.

If Davis gets just one or two days of notice for a load, McKinny said, he might not be able to guarantee that an owner-operator with a truck will be there.

He also said he does not think the economy is truly booming. Rather, it is a case that the current limited capacity of trucks and drivers is being taxed.

Truckload carrier Venture Express is seeing better business, said Terry Croslow, its chief financial officer. Part of that improvement is dedicated contract carriage to supply automakers in the South.

“The South is booming. There’s construction for commercial real estate, and consumer spending is better. I don’t know if the whole nation is really robust, but things are better than expected,” Croslow said.

Costello said he spent a lot of time at ATA’s just-concluded Management Conference & Exhibition talking about the driver shortage and trucking capacity.

“I still think a capacity crunch is coming, but it’s still a ways off,” he said.