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June 23, 2020 12:00 PM, EDT

May Tonnage Falls 9.6% Year-Over-Year

Trucks on highwayJohn Sommers II for Transport Topics

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Truck tonnage in May declined 9.6% from year-ago levels, the steepest seasonally adjusted year-over-year percentage drop in more than a decade, American Trucking Associations reported.

The ATA For-Hire Truck Tonnage index registered 106.1 last month, down from 117.4 a year ago, the federation reported June 23. (In calculating the index, 100 equals the year 2015.)

The last similarly sharp drop was a 10.7% decline in June 2009.

On a sequential basis, the May result was down just 1% from 107.2 in April. That’s an improvement over April’s sequential result, when the index dropped 10.3% compared with March.

“While tonnage fell in May, even though other economic indicators like retail sales and housing starts rose, I’m not overly concerned,” said Bob Costello, chief economist at ATA.

“First, while down over 10% sequentially in April, truck tonnage did not fall as much as other economic indicators that month. This means that any rebound is tougher since tonnage didn’t fall substantially to begin with. Second, there are indications that freight continues to improve as more and more states and localities lift lockdown restrictions.”

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ATA’s For-Hire Truck Tonnage Index is dominated by contract freight as opposed to spot market freight.

Trucking serves as a barometer of the U.S. economy, representing 71.4% of tonnage carried by all modes of domestic freight transportation.

Meanwhile, the IHS Markit Flash Composite Purchasing Managers Index, also released on June 23, was 46.8 in May compared with 50.9 a year ago. However, sequentially it marked an increase by 26.4% from April to May, jumping from 37 to 46.8, putting the index at a four-month high.

IHS Markit said the higher number is another indication the U.S. economy is beginning to recover from the steep downturn in March, April and May.

“As more firms and states began to reopen following the coronavirus disease 2019 outbreak, offsetting weak demand faced by many other companies, the overall pace of decline eased among goods producers and service providers,” the report said. “The rate of contraction nevertheless slowed notably, with manufacturers, in particular, registering only a fractional decrease.”

IHS said its composite index is based on original survey data from IHS Markit’s PMI surveys of both services and manufacturing.

Portland, Ore.-based DAT Freight and Analytics said its Truckload Volume Index released June 12 showed “truckload freight volumes recovered to pre-COVID levels and largely returned to seasonal patterns in the second half of the month.”

“As businesses begin to reopen across the country and produce season ramps up, we’re seeing a trend back to pre-COVID levels, consistent with seasonal market dynamics,” said Ken Adamo, chief of analytics at DAT. “There’s also increased demand at major ports and signs that June will be a strong month for freight.”

DAT said its index, which is a measure of dry van, refrigerated or reefer and flatbed loads moved by truckload carriers, rose 0.6% from last month but was down 8% compared with May 2019.

On June 24, DAT reported spot market rates for vans averaged $1.76 a mile nationally, up 16 cents compared with the May average. Refrigerated or reefer rates rose to $2.11 a mile, up 9 cents, and flatbed rates jumped to $2.04 a mile, up 14 cents from the previous month.

DAT said this is evidence the spot market has bottomed out and is trending upward in June.

“There was a deep hole to climb out of due to the economic downturn, but we’re seeing the market stabilize,” Adamo said. “The economic engine of the country restarted and picked up momentum toward the second half of May and into June.”

DAT also said the increase in rates is taking place as jurisdictions ease shopping restrictions and retailers ship goods ahead of the Independence Day holiday and close of the second quarter.

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The Cass Freight Index is also reporting some signs of life in the trucking economy in May. The index was .938, which was down 23.6% year-over-year when it was 1.228 in 2019. But the month-to-month change was up 1.6%, when compared to April’s .923 index.

“We were surprised not to see more of an uptick; the reopening schedule appears to have unfolded slower than we anticipated,” the company said.

“June is normally the best month of the second quarter, and we’d expect a significant improvement in the Cass Index this month, even if still well below year-ago readings. We do not believe we will reach 2019 freight activity levels until 2021, at the earliest, due to the significant rise in unemployment and other results of government intervention.”

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