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January 21, 2020 12:15 PM, EST

ATA Truck Tonnage Increased 3.3% in 2019

Trucks on highwayJohn Sommers II for Transport Topics

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Truck tonnage for 2019 increased 3.3%, softer than year-ago levels but continuing a streak of annual gains, American Trucking Associations announced Jan. 21.

According to ATA’s seasonally adjusted for-hire truck tonnage index, tonnage for the full year grew at about half of the 6.7% growth rate the index saw in 2018. That said, 2019 was the 10th consecutive year that the index posted an annual gain.

For December, the index rose 3% to 118.2 from a year ago. On a sequential basis, the seasonally adjusted index rose 4% in December after falling 3.4% in November.

“Last year was not a terrible year for for-hire truck tonnage, and despite the increase at the end of the year, 2019 was very uneven for the industry,” ATA Chief Economist Bob Costello said. “The overall annual gain masks the very choppy freight environment throughout the year, which made the market feel worse for many fleets. In December, strong housing starts helped advance the index forward.”

ATA calculates its monthly tonnage index based on surveys from its membership. The figure is preliminary 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, economic comparisons and financial indicators.

Looking ahead, an economist with FTR Transportation Intelligence believes 2020 could be a tepid year when it comes to freight growth.

Avery Vise, vice president of trucking research at transportation intelligence firm FTR

Vise

“The sense of a lackluster but stable freight market coupled with a weak but stable utilization picture translates into freight rates that probably won’t move much” this year, said FTR Vice President of Trucking Avery Vise during the company’s Jan. 16 State of Freight webinar.

“Conditions certainly are not as good as trucking companies would like,” Vise said. “But fundamentally they are not as bad as people may hear. We continue to see many business failures, but the principal driver appears to be trucking insurance costs, not market fundamentals.”

He added that FTR forecasts trucking conditions will “remain in near-neutral range until conditions improve modestly” late this year.

The group said weaker spot rates are mainly to blame for a decline in the latest FTR Trucking Conditions Index, which slipped in November to a reading of -1.58.

The index tracks five major conditions in the U.S. truck market: freight volumes, freight rates, fleet capacity, fuel price and financing. From there, the individual metrics are combined into a single index. A positive score represents good conditions, while a negative score represents bad conditions. Readings near zero are consistent with a neutral operating environment, and double-digit readings, either up or down, suggest significant operating changes are likely, FTR said.

In December, the DAT Truckload Freight Volume Index was mixed as rates rose to an 11-month high for dry van and refrigerated equipment on the spot market, even though volume declined slightly for spot and contract truckload freight.

Compared to November, spot market van rates rose 12 cents in December, but volume fell 1.5%, the company said.

Both van and reefer rates rose 12 cents per mile during the month. Van rates averaged $1.94, while reefers hit $2.30. Flatbed rates averaged $2.17 per mile in December, a 7-cent increase from November but the second-lowest monthly average for the year.

DAT said the year-end boost in rates was mostly the result of inventory management by e-commerce vendors, which prioritize delivery speed. At the same time, they don’t produce the same truckload volumes as the traditional brick-and-mortar retailers that still sell well over 80% of holiday merchandise, which creates more urgency on the spot market.

According to the group, van volume lost 1.5% month-over-month. Reefer load counts held steady, while flatbed volume declined 2.7%. Compared to December 2018, vans gained 14%, reefers added 9%, and flatbed volumes declined by 0.8%.

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DAT said lower volumes rarely mean lower rates in the last month of the year.

Because of the surge of holiday shopping, spot rates have increased in December for the past five years, but the 2019 surge was stronger than usual, with van and reefer rates hitting their highest marks since January 2019.

“Our rate forecast indicates that van pricing should be flat in the first quarter of 2020 compared to Q4 2019, with upside potential of 3 to 5 percent,” DAT Solutions Chief of Analytics Ken Adamo said. “The forecasting model will respond in real time to any disruptions in the timing of weather events, trade tensions and the spring shipping season.”

“We expect year-over-year rate comparisons to turn positive in the spring, for the first time since September 2018,” he added.

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