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Truck tonnage in March declined on an annual and month-to-month basis, with year-ago comparisons that recall the first month that the COVID-19 pandemic gripped the nation, noted American Trucking Associations Chief Economist Bob Costello in the federation’s monthly For-Hire Truck Tonnage Index release.
“A year ago in March, we were delivering all that toilet paper and there was a surge of activity,” Costello said. “There was panic buying and people were buying meat and toilet paper. Last March was that transition month.”
The ATA index for March fell a seasonally adjusted 9.5% when compared with March 2020. On a month-over-month basis, the index decreased 5.1% in March after declining 2.3% in February. In March, the index equaled 106.8 compared with 112.5 in February. (The index equaled 100 in 2015.)
Costello told Transport Topics that he’s not concerned with the March declines. “Halfway through March , everything got shut down and some freight just fell off the cliff, but there was other freight that just skyrocketed,” Costello said. “It was a difficult year-over-year comparison.”
Costello noted that some trucking fleets he has spoken with reported that the early days of last month were somewhat soft in terms of freight, but the second half of the month was much stronger. He also said supply chain issues — including the much-discussed shortages of microchips used in computers, trucks and cars — also drove freight numbers down.
Going forward, Costello predicts that the U.S. economy is poised for a significant rebound from the pandemic as Americans continue to receive vaccinations and federal COVID-19 relief spending adds fuel to the economy.
Costello is forecasting Gross Domestic Product growth in both the second and third quarters to be near 8%, with an annual growth rate of 6%.
“That’s the strongest GDP growth rate going back to the 1980s,” Costello said. “That’s because of our ability to vaccinate people and getting people back to work.”
Meanwhile, the U.S. Bank Freight Payment Index determined that the national truck freight market softened during the first quarter of 2021. The study cited severe cold weather across parts of the country during February along with the lingering supply-chain shortages, especially the aforementioned microchips. The quarterly analysis of national shipments and spending showed Q1 shipments dipped 8.3% compared with a gain of 5.3% in Q4 2020. Spending for Q1 dipped 4.7%, compared with an increase of nearly 20% in the last three months of 2020.
“The freight industry hit an economic recovery ‘speed bump’ during the first quarter,” U.S. Bank Vice President and Director of Freight Data Solutions Bobby Holland said. “Winter storms, supply chain disruptions and a continued driver shortage all contributed to tight capacity. However, headed into the spring and summer, with many Americans vaccinated, government stimulus and increased economic reopening, we anticipate increased spending and increased factory output — leading to rising freight volumes.”
Tune in today at 11 a.m. ET for our live stream with @ScottWLuton and @gregoryswhite from @_supplychainnow to discuss the latest #supplychain data from the Q1 2021 U.S. Bank Freight Payment Index. https://t.co/gbOYD0R7pI pic.twitter.com/l3cBXq9M7m— U.S. Bank Payments (@USBankPayments) April 22, 2021
The March Logistics Managers Index registered 72.2 for the month, the third highest number in the last five years. In February the index registered 71.4. In March 2020, as the economy was beginning to shut down because of the pandemic, the index registered 58.9.
One of the index’s authors, Dale Rogers at Arizona State University, said last month’s score was fueled by increasing costs in the trucking industry and a tightening of capacity across the board.
Rogers also noted that warehouse prices are at their highest level in history.
“This is at least partially due to the fact that many warehouse contracts are multiyear agreements, and do not shift as dynamically as inventory or transportation costs,” Rogers said. “This high reading indicates two things. One, warehouse capacity has been steadily constrained for most of the last year, and the lack of supply is catching up to pricing. Two, because of increased demand for last-mile delivery and similar services, firms are continually seeking more warehouse space, and may be forced to pursue space at higher, spot-market prices.”
For the rest of the year and into 2022, Rogers anticipates the trucking industry and overall economy to remain exceptionally strong.
“The U.S. economy is widely expected to boom over the next year. Millions of Americans are being vaccinated every day, and many have received stimulus checks over the last month,” Rogers said. “This is expected to put even further strain on supply chains as the burgeoning — some would even say pent-up — U.S. consumer demand is unleashed throughout the year.”
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