July Truck Tonnage Posts 5.1% Annual Gain

trucks John Sommers II for Transport Topics

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Truck tonnage in July rose 5.1% year-over-year but slipped 1.1% when measured on a sequential monthly basis, according to American Trucking Associations.

The ATA For-Hire Truck Tonnage Index equaled 116.2 compared with 117.5 in June.

Through the first seven months of 2022, tonnage is up 3.4% compared with year-ago levels, ATA said Aug. 23. The July year-over-year result marks the 11th consecutive month of annual gains, the federation said.

“Tonnage declined sequentially in July for only the second time during the last 12 months,” said ATA Chief Economist Bob Costello. “While tonnage is much stronger than a year ago, the monthly gains have moderated as the year has gone on. The combination of softer consumption of goods, home construction falling and slower manufacturing activity are the main reasons.”

In calculating the advanced seasonally adjusted index, 100 represents the year 2015.

ATA’s For-Hire Truck Tonnage Index is dominated by contract freight as opposed to spot market freight. Trucking represents 72.5% of tonnage carried by all modes of domestic freight transportation, including manufactured and retail goods, according to ATA.

Trucks hauled 10.23 billion tons of freight in 2020. Motor carriers collected $732.3 billion, or 80.4% of total revenue earned by all transport modes, it said.

Another index that measures the health of freight transportation, the Logistics Managers’ Index, reads in at 60.7 in July, down from the red-hot 74.5 in the same month in 2021, and declining 4.3 points from June’s reading of 65.0. The LMI’s authors said the July number is the lowest since May 2020 and the second consecutive month where it was below the all-time industry average of 65.3.

However, the logistics industry is still expanding, albeit at a slower pace. Any reading above 50 is considered a positive number and below 50 indicates a contraction. In March the LMI reached its all-time high of 76.2.

One of the LMI’s authors, Arizona State University business professor Dale Rogers, said the U.S. economy and the trucking industry remain relatively strong as they continue to battle potential recessionary headwinds.

Costello

“Despite the two quarters of consecutive contraction, the National Bureau of Economic Research is unlikely to declare an official recession due to strong job growth and consumer and business spending levels. Many analysts still believe the fundamentals of the economy are strong, and that growth might pick up again through the second half of the year. This is backed up by the increase in international commerce over the last month,” Rogers said.

The report said economic activity in the first three weeks of July was significantly slower than the last full week of the month, leading to optimism the economy will remain strong going into the so-called “peak season” where retailers begin preparing for the holiday shopping season in October, November and December.

As an example, the LMI’s authors point to the strong month of July the Port of Los Angeles logged.

The LMI is researched and written every month by team members from Arizona State University, Colorado State University, Rochester Institute of Technology, Rutgers University and the University of Nevada-Reno, and in conjunction with the Council of Supply Chain Management Professionals.

The U.S. Bank Freight Payment Index said the national truck freight market grew significantly during the second quarter of 2022 after falling the previous two quarters. The index was 279.6 in the second quarter, up 19.7% year-over-year when the index was at 233.6 and improving by 3.3% quarter-over-quarter when it registered at 233.6.

“The economy contracted in the first quarter of 2022, which allowed shippers to pull freight out of the spot market. This resulted in significant drops in spot market prices and volumes. More freight was moved back to their contract carriers. This contributed to the U.S. Bank freight market metrics rising during the second quarter,” the report said. “One trend that continued in the second quarter was the high cost of diesel fuel, which impacted freight outlays during the quarter as reflected in the U.S. Bank National Spend Index. Besides the high level of fuel surcharges, contract pricing seemed to hold steady compared with spot market rates, which fell significantly during the quarter.”

Meanwhile, the July Cass Freight Index increased 0.4% year-over-year and now sits at 1.182 compared with 1.117 a year ago. When measured against June’s number, the index declined 1.7% from 1.203.

“Freight demand has flattened out this year with inflation near 9% and significant substitution from goods back to services. Considering the extraordinary goods consumption during the pandemic, a reversal as services have reopened shouldn’t be much of a surprise,” the report said. “Inventory to sales ratios are still below historic norms, so this major tailwind for freight demand over the past 18 months is likely fading but has not turned to a headwind at this point.”

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