January Truck Tonnage Hits Record

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

Truck tonnage surged 6.5% in January from a year earlier to an all-time high, fueled by inventory restocking in the retail and industrial sectors, American Trucking Associations reported.

The seasonally adjusted index rose to 125.2 and grew at the fastest percentage pace since the record of 124.4 was set in December 2011. The sequential gain was also strong, with January rising 2.9% from December, the third straight monthly gain.

“The trucking industry started 2013 with a bang,” ATA Chief Economist Bob Costello said. “Trucking likely benefited in January from an inventory destocking that transpired late last year, thus boosting volumes more than normal early this year as businesses replenish those lean inventories.

“I don’t think it was a huge restocking, but a small one coupled with the end of destocking,” Costello told Transport Topics. “Retail is a big part of it. But the ISM is also suggesting it is happening in manufacturing, too.”

He was referring to the Institute for Supply Management’s factory report earlier this month that showed improvement to 53.1 in January from 50.2 the month before, just barely above the 50 mark that signals expansion. The same group’s index of nonmanufacturing business activity was 55.2 last month, near a 10-month high.

Housing was another positive force.

Construction of single-family homes rose to the highest level since late 2008, and building permits also increased, the Commerce Department announced Feb. 20. The National Association of Realtors the next day said existing home sales were 10% above January 2012.

“We ended 2012 on a solid note, and we do have some momentum heading into this year,” Gus Faucher, a senior economist at PNC Financial Services Group Inc., told Bloomberg News. “The fact that single-family starts are up is very encouraging. It is more important to the economy in terms of employment and growth.”

A report about industrial sector activity from Robert W. Baird analysts also was favorable.

“Underlying demand reaccelerated in late January following a slow start to the month,” the report said, citing the potential for housing to boost demand both for products and trucking.

ATA’s not seasonally adjusted index gauging actual shipments also spiked, rising to 122.4 in January, 9.2% above the same month of 2012 and 10.7% above December.

Several days before ATA’s Feb. 19 report, the TransCore DAT’s North American Freight Index, a load board, showed freight volumes rose 42% from January 2012 to set a record for that month.

David Schrader, senior vice president of operations at TransCore, Portland, Ore., said the stronger-than-expected January results reflected stronger industrial shipments of exports that helped to raise flatbed shipments by 28% and the restocking that drove up dry van loads by 15%.

Increased shipments to support oil and gas exploration — and a sense of relief that the federal “fiscal cliff” was averted — also helped, Schrader told TT.

Peter Nesvold, an analyst for Jefferies and Co., said tonnage increases were backed up by recent increases in diesel fuel purchases by fleets as reflected in Department of Energy data, with consumption rising at the fastest pace since June on a three-week average basis.

Costello also worked to temper expectations.

“I’m not screaming economic boom from this one report,” he told TT, referring to January tonnage. “I don’t believe that January tonnage shows a strong economic recovery. I still believe the economic growth will be relatively weak early this year.”

Costello told attendees at the American Truck Dealers’ convention earlier this month that political uncertainty continues to hold back the economy, as the federal government faces automatic budget cuts known as sequestration, as well as the debt ceiling.

“I see a much more robust recovery just percolating under the surface, but with all this uncertainty in Washington, how many businesses want to get out on a limb?” he asked.

February could continue the positive January momentum, several sources said.

“In terms of freight volumes, there has been a reasonably healthy carry-through this month, but it is by no means as strong as January,” Schrader told TT on Feb. 20.

He also noted that the January and February freight comparisons can be problematic because of winter weather. Last year, he said, freight shipments were moved up because of an abnormally warm winter. This year has followed more normal patterns, Schrader added.

“Numerous shippers stated that they are planning to move spring freight earlier than normal,” said a report by BB&T Capital Markets analyst Thom Albrecht on Feb. 15. “This occurred last year due to the historically mild winter.”

This year, Albrecht said, freight is moving earlier because shippers fear a “capacity crunch” in the second quarter, in line with peaking demand from May through early July.

Like Schrader, Nesvold said February freight demand remains strong, improving in the 5% range.

Staff Reporter Seth Clevenger contributed to this report.