June Truck Tonnage Ticks Down 0.8% on Annual Basis
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Truck tonnage in June slipped 0.8% when measured against the same month in 2022, the fourth consecutive year-over-year decline, according to American Trucking Associations' For-Hire Truck Tonnage Index released July 18.
However, on a month-to-month basis, the seasonally adjusted index rose 2.1% compared with May, ATA said. The index equaled 116.5 in June compared with 114.1 in May.
ATA Chief Economist Bob Costello said that despite the sequential gains, the freight market is still in a down cycle.
“While the tonnage index increased in both May and June, it remains in recession territory,” he said. “The index continues to fall from a year earlier and is off 1.9% from its recent peak in September 2022. A multitude of factors have caused a recession in freight, including stagnant consumer spending on goods, lower home construction, falling factory output, and shippers consolidating freight into fewer shipments compared with the frenzy during the goods buying spree at the height of the pandemic.”
Costello noted, however, that there are hopeful signs.
“The magnitude of the year-over-year declines is improving, perhaps pointing to a bottom in the freight market,” he said. The sequential decline in June was narrower than the 2.4% month-to-month decline in May. In calculating the index, 100 represents 2015.
Separately, another closely watched transportation industry index shows the sector is slipping into recession territory. For June, the Logistics Managers Index came in at 45.6, the fourth consecutive month that the LMI has reached an all-time low.
Arizona State University business professor Dale Rogers, an author of the index, said the economy has clearly shifted from one dominated by goods to being more balanced with services.
“When taken as a whole, quarter two economic data was strong in the U.S. — if not in the freight sector,” he said. “For instance, new home sales are up, the unemployment rate is down, and quarter one GDP growth has been revised up to 2% growth with quarter two growth predicted to be around 1.7%. Much of this has been spurred by consumer spending, which was up at 4.2% in quarter one — the highest positive rate of change since the end of lockdowns in mid-2021,” Rogers said.
He added that consumer sentiment remains resilient.
“Spending is still robust — particularly when compared to the rest of the world,” Rogers said. “This is somewhat buoyed by consumer sentiment, which improved significantly in June, reading in at 64.4 according to the University of Michigan’s Consumer Sentiment Index. This reading is up 8.8% from May and 28.8% year-over-year, suggesting that consumers are not nearly as worried about a recession as they were a year ago when inflation was driving up prices.”
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Researchers at Arizona State, Colorado State University, Florida Atlantic University, Rutgers University and the University of Nevada-Reno compile the report each month in conjunction with the Council of Supply Chain Management Professionals. A reading above 50 indicates economic growth, while a reading below 50 indicates that the economy is retracting. The LMI is a combination of eight unique components that comprise the logistics industry, including inventory levels and costs, warehousing capacity, utilization, and prices, and transportation capacity, utilization, and prices.
Meanwhile, the monthly DAT Truckload Volume Index shows the trucking industry stabilized in May and June, albeit at a slower rate than during the highly charged three years of the COVID-19 pandemic. The index is an indicator of how many loads are moved during a given month.
For June, the dry van index was down 1% compared with May, and the refrigerated freight TVI declined by 3%. However, the flatbed TVI posted a 2% gain.
On the spot market, the national benchmark rates for van and reefer freight rose, while the flatbed rate declined compared with May.
The spot van rate was $2.08 per mile, up 3 cents for the first increase in five months, while the spot reefer rate was $2.47 a mile, up 3 cents. The spot flatbed rate was $2.61 a mile, down 4 cents.
“The gap between spot and contract rates was the narrowest since April 2022,” DAT Chief of Analytics Ken Adamo said. “Rates for van and refrigerated freight increased for the third straight month, and volumes were almost unchanged from May. These are signs that spot truckload prices have reached the bottom of the current freight cycle.”
Adamo added that DAT and others across trucking are following the ongoing UPS-Teamsters negotiations, which could tighten capacity if workers strike.
“Demand for truckload services typically slows at this time of year, but this could change quickly given the threat of strikes in the parcel and less-than-truckload sectors,” Adamo said. “Shippers are putting contingency plans in place and would look to freight brokers and carriers on the spot market to keep their linehaul operations moving. Demand for trucks would jump, especially around Louisville, Memphis, Indianapolis, Dallas and other major parcel hubs."
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