Truck Tonnage Gains in Nov. Following Superstorm Sandy

This story appears in the Dec. 24 & 31 print edition of Transport Topics.

Truck tonnage rose 1% in November year-over-year, as Superstorm Sandy nudged the freight index higher after de-pressing demand in October, American Trucking Associations reported.

The index reading was 118 for November, rebounding 3.7% on a month-to-month basis after an equal percentage drop during October, ATA said on Dec. 18.

Prior to Sandy battering the Northeast in late October, truck tonnage had improved on a year-over-year basis every month since December 2009.

“Sandy impacted both October’s and November’s tonnage readings,” ATA Chief Economist Bob Costello said. “It was still good to see tonnage snap back in November.”

Last month’s increase reflected greater shipments of food and other staples, as well as freight that shippers chose to hold back until the storm ended, ATA said.

“We definitely had a post-Sandy restocking,” said Don Thornton, senior vice president of sales at load-board operator TransCore, based in Portland, Ore. Trans-Core’s freight availability rose 5.7% in November from October, the first month-to-month increase since the company began keeping records.

“It was also driven by some unusually robust markets, including a late potato harvest,” Thornton added.

Tonnage grew in November as U.S. economic reports offered mixed signals on the overall economy.

Third-quarter gross domestic product rose at a 3.1% annual clip, the Commerce Department reported on Dec. 20. Earlier in the week, reports showed housing starts fell, but building permits increased.

A Federal Reserve report on Dec. 14 showed a 1.1% increase month-to-month in November manufacturing activity, reversing a 0.9% drop the month before that was attributed to Sandy. On a year-to-year basis, manufacturing output was just 3.1% higher, barely half the pace that was maintained earlier in 2012.

ATA also said the non-seasonally adjusted tonnage index was 115.7 in November, which reflects the amount of freight actually hauled. That result was 6.5% below October but 0.3% stronger than November 2011.

Looking at the current month, the index would have to increase 9.4% from the November 2012 reading to attain year-over-year growth.

The final month of 2011 set an all-time record for ATA’s index of 124.5. That represented a 10.5% increase in December 2011 over 2010, which was the largest percentage growth in 13 years.

“There has been a slight year-over-year drop in volumes” in December, Thornton said, “but it’s nothing alarming.”

The latest tonnage results were consistent with earlier reports about November freight trends from the Cass Freight Index, analyst reports and carrier comments (12-17, p. 6).

Over the longer term, ATA’s Costello was cautious about freight trends.

On the plus side, he predicted that tonnage hauled by flatbed carriers should grow in the spring as weather improves in the Northeast and more rebuilding funds become available.

“Outside of Sandy, if the ‘fiscal cliff’ isn’t fixed in time, expect a slowdown in tonnage early next year as paychecks shrink for all households,” he said, referring to ongoing tax and spending talks in Washington to address mandatory spending and budget cuts on Jan. 1.

“Since trucks account for the vast majority of deliveries in the retail supply, any reduction in consumer spending will hurt,” Costello said.

Keybridge Research Director Adam Karson offered a more optimistic view of 2013 during a Dec. 18 conference call. He predicted steady economic improvement, particularly in the transportation leasing sector. The reason, he said, was spending that was postponed from 2012 because of uncertainty surrounding federal fiscal issues.

“Businesses have largely been hitting the ‘pause’ button in 2012,” Karson said, forecasting an increase in transport leasing that could be as high as 12% in 2013, including cars and trucks of all sizes.

Costello said that, even if the talks between the White House and congressional leaders are successful in mitigating the effects of any tax changes or budget cuts, tonnage growth will remain below the 2.8% growth pace over 11 months of this year.

The expected tonnage slowdown will result from weaker growth in manufacturing and consumer spending that will be mitigated by improved markets for housing and auto sales, he said.

In addition, he said “the supply chain is having a difficult time working off excess stocks.”

TransCore officials said other factors boosted November volume, including strong demand in the Atlanta, Philadelphia and Buffalo, N.Y., markets, more auto parts in Ohio for van freight and increased pipeline-construction that helped flatbed freight.

Also playing a role during November was an eight-day strike started Nov. 27 by clerical workers at the adjacent ports of Los Angeles and Long Beach, Calif.

Container cargo fell 16% at the Port of Los Angeles from a year earlier but rose 20% at the Port of Long Beach, where three terminals were unaffected. Combined, container volume through the ports fell 1.7% during November from the same month in 2011.