August Truck Tonnage Up 2.9%

This story appears in the Oct. 4 print edition of Transport Topics.

Truck tonnage rose for the ninth consecutive month in August from year-ago levels, but the gain slowed to 2.9%, in line with the recent deceleration in the U.S. economy, American Trucking Associations reported.

The gain in August was the smallest since February. ATA’s seasonally adjusted index fell to 106.9 from 110.0. The unadjusted index, which measures actual freight moved in August, was 113.5, 3.2% above July.

ATA also said that its seasonally adjusted index fell 2.7% in August from July, which was the biggest monthly percentage drop since March 2009.

“We fully anticipate sluggish economic growth for the remainder of this year, and the latest tonnage numbers are reflecting that slowdown,” ATA Chief Economist Bob Costello said on Sept. 28. “I do think this economy is going to grow at a very lackluster pace.”

The Department of Commerce on Sept. 30 revised its measure of second-quarter gross domestic product to an annual growth rate of 1.7%, less than half of the 3.7% pace in the first quarter.

“It is evident that the U.S. economy is still on shaky ground,” ATA said in a separate economic report on Sept. 24. “Consumers continue to struggle with a weak labor market, tight credit conditions and high debt levels.”

Despite the slower growth rate, tonnage through the first eight months of 2010 is 6.2% higher than the same period of 2009.

Fleet executives said they are noticing a slowdown, though business remains relatively strong and could surge again soon.

“We have seen a little bit of softening on certain days in the past two weeks,” said John Kaburick, chairman of Earl L. Henderson Trucking Co., Salem, Ill., though the company is still turning away a small amount of freight in secondary lanes. “We are still well above 2009 levels.”

“I think this is just a little softening before the holiday rush,” Kaburick said. “Several of our shippers are saying, ‘Get ready.’ It’s going to take off. With any kind of an uptick in the economy, the supply-demand balance is going to be back in our favor.”

“We’ve seen business pick up somewhat in August and September, but the freight levels are not as good as they were in the spring and early summer,” said Richard Bailey, president of Boyd Bros. Transportation Inc., Clayton, Ala. “We saw a surge [then] like we never had before.”

Inventory rebuilding along with seasonal moves such as home and garden products triggered fast growth earlier this year, he said.

“Business is still consistent and steady,” Bailey said, and Boyd Bros. also is turning down loads, but not as many as earlier this year.

“The supply of trucks and the demand for freight are pretty balanced right now,” he said.

Part of Boyd Bros.’ growth, is from shippers that want to use larger, asset-based carriers because of concerns about capacity as the CSA safety ratings program takes effect, Bailey said.

While cautious about economic growth, ATA’s Costello was upbeat about supply-demand trends.

“While I’d much rather see better tonnage figures, motor carriers can now do better with small increases in demand, since so much supply left the industry during the recession,” Costello said.

Meanwhile, the Commerce Department’s latest report on durable goods orders also was favorable. Those orders, for products which last more than three years, rose 2% in August and 13% from a year earlier, excluding transportation equipment such as airplanes.

The Conference Board’s index of leading economic indicators also was positive, rising 0.3%, for the third increase in the past four months, a sign that “continues to point to a painfully slow recovery,” ATA said.

Other freight indicators also sent mixed signals.

An index compiled by investment bank Robert W. Baird & Co. Inc., Milwaukee, showed a 4.7% year-to-year growth in freight volume, analyst Jon Langenfeld wrote in a report, slower than the 5.1% pace in July.

“Industry contacts broadly suggest demand remains solid, although not as robust as the second quarter, with expectations calling for a modest peak season,” Langenfeld wrote.

The Ceridian-UCLA Pulse of Commerce Index, based on diesel fuel purchases by fleets, rose 6% from August 2009 but fell 1% from July of this year.

Spot-market demand in August fell 14% from July, load board operator TransCore, Portland, Ore., reported Sept. 16, although that demand was 75% higher than in August of last year.

However, the Cass Freight Index, published by a St. Louis bank that pays freight bills, showed that shipments — primarily by truck — rose 8.3% in August from July and are 16% above last year.