Truck Tonnage Increases 4.2% in February in Fourth Straight Monthly Improvement

This story appears in the March 25 print edition of Transport Topics.

U.S. truck tonnage climbed 4.2% in February from a year earlier, marking the second straight month of growth and getting 2013 off to a solid start, American Trucking Associations reported.

The seasonally adjusted index also increased on a month-to-month basis, rising 0.6% in February to 123.6, the highest since December 2011. Tonnage has now increased sequentially for four straight months, gaining a total of 7.7% during that timeframe, ATA said on March 19.

ATA Chief Economist Bob Costello said tonnage has been up earlier than anticipated this year, but he still sounded a note of caution.

“While I think this is a good sign for the industry and the economy, I’m still concerned that freight tonnage will slow in the months ahead as the federal government sequester continues and households finish spending their tax refunds,” he said.

Costello said he believes that sequestration — the automatic federal spending cuts that began March 1 and will slash $85 billion from domestic and defense programs — will help “keep a lid” on economic growth, especially in the second quarter.

He also noted that households have seen their paychecks shrink because of the 2% rise in the payroll taxes that occurred around the same time.

“The recent strength in retail sales could be that households have dipped into savings more than expected, [rather] than cutting their spending,” Costello said. “I think they are doing this by ‘pre-spending’ their tax refunds. Thus, I’m concerned that consumer spending could slow in the next quarter, as well.”

He also warned that the debt ceiling issue will resurface in the summer, “which will add significant uncertainty to households and businesses” and could limit risk-taking and spending by companies and families.

“A little longer-term, I think the economy and the industry are poised for a more robust recovery,” Costello said.

The February year-over-year gain followed a 4.6% increase in January to 123, which ATA revised downward from the 6.5% jump originally reported.

Actual freight volumes without seasonal adjustment declined 5.5% in February from the previous month, ATA reported.

Steve O’Kane, president of regional less-than-truckload carrier A. Duie Pyle Cos., said freight volumes at his company were “dead flat” in February compared with the previous year.

For the year-to-date, A. Duie Pyle is running about 1% ahead of 2012, he added.

“The weather in the Northeast has been a little worse and that had some impact, but overall, our customer base across the board has just been in a remarkably narrow band compared to where they were last year,” O’Kane said.

The fleet didn’t feel any immediate effects from the sequestration debate during February, he said, “but I think, overall, it’s just acting as a wet blanket on the whole economy, keeping things from taking off for us.”

Looking ahead, O’Kane said he’s not anticipating a big increase in freight demand, considering how consistent it has been compared with last year.

“Obviously, we’ll work really hard to shift some share, where possible, and get growth that way because I don’t think we’re going to see it in the Northeast from the economic growth,” he said.

A. Duie Pyle, based in West Chester, Pa., ranks No. 82 on the Transport Topics Top 100 list of the largest U.S. and Canadian for-hire carriers.

James Meil, chief economist for truck component maker Eaton Corp., said the solid start for freight in 2013 has been driven by strength in manufacturing and construction, key economic sectors for motor freight.

Looking to the months ahead, Meil said that if the federal government can reach even temporary fixes for budget issues and if Europe manages its way through its current financial crisis, “we should see a 2013 that now looks poised to offer some upside surprise for the overall economy — and for freight — compared to what we thought in 2012’s fourth quarter.”

Load board operator TransCore DAT’s North American Freight Index, which measures spot-

market freight availability, showed a return to “typical” freight levels in February, following a record January.

February freight declined 2.5% from the same month a year ago and dropped 14% from the January elevated volumes.

“It’s a slowdown, but it’s a slowdown off a very high level,” said David Schrader, senior vice

president of operations for TransCore.

He also noted that February 2012 had the second-highest volume on record for that month, making it a tough year-over-year comparison.

Mark Montague, industry pricing analyst for TransCore’s DAT unit, said the transportation of steel and infrastructure materials used in hydraulic fracturing, or fracking, was strong in February, as were port traffic and products supporting the automotive industry.

Overall, February was a solid month, Schrader said. “We’re cautiously optimistic that what we’re seeing in the first quarter so far will continue in the balance of the year,” he added.

Analyst Peter Nesvold, writing to clients of Jefferies & Co., said his firm’s channel checks suggest that month-to-date loads in March are building on the year-over-year strength of January and February tonnage.