November Tonnage Rises 6% in 24th Straight Monthly Gain

Truck tonnage rose 6% in November from the levels of a year ago, riding a wave of growth sparked by manufacturing demand and inventory restocking, American Trucking Associations reported.

The November report marked the 24th consecutive year-over-year increase, as the advance seasonally adjusted index reached 116.6. Over the first 11 months of 2011, cumulative tonnage rose 5.4% above the same period a year earlier. In the index, 100 equals freight levels in 2000.

“Tonnage levels continue to point to an economy that is growing, not sliding into a recession,” ATA Chief Economist Bob Costello said on Dec. 22. “Over the last three months, tonnage is up 2.3% and stands at the highest level since January [2011].”

The year-over-year growth pace was the fastest since the 6.5% reported in June. ATA also said the index was 0.3% higher in November than in October.

“Two primary factors have helped truck tonnage in recent months,” Costello explained. “First, manufacturing output, which generates a significant amount of truck freight, has generally been increasing. Second, retail inventories are very lean, which is helping freight as well, since retailers don’t have much excess stock and need to replenish when sales go up.”

There were numerous indicators of improvement in the underlying economy during late December, spanning housing, manufacturing and consumer spending.

Orders for durable goods, products meant to last at least three years, excluding aircraft, improved 0.3% in November, the Commerce Department reported.

Holiday spending by consumers was rising 3.8% from last year, according to the National Retail Federation, which raised its estimate of consumer spending on gifts.

“Spending has looked pretty good so far, and continued job and income growth will help maintain that,” Samuel Coffin, an economist at UBS Securities LLC in New York, told Bloomberg News. “At some point, events in Europe are likely to have some effect on activity, but we’re heading into that head wind with a lot of momentum.”

The Conference Board reported on Dec. 22 that its index of leading economic indicators was 6% higher in November than in November 2010.

The gain in the index “is pointing to continued growth,” Ken Goldstein, an economist at the Conference Board, said in a statement, “possibly even gaining momentum” in early 2012.

“However, this somewhat positive outlook for the domestic economy is at odds with a global economy that appears to be losing steam,” he said.

There also were signs of a solid upswing in the long-suffering housing market, where new construction and existing home sales have lagged for at least four years.

The Dec. 23 report from the Census Bureau showed new construction at the highest level in 19 months at 685,000 units, which was 24% above November 2010.

Building permits issued, also compiled by the Census Bureau, rose 21% in November over the year-earlier period.

However, Commerce also revised third-quarter gross domestic product growth down to 1.8% from its previously estimated 2%.

Still, analyst and company comments backed up the generally favorable economic reports.

“Carriers experienced a late November surge as retailers positioned inventory ahead of the holiday season,” Benjamin Hartford, an analyst for Robert W. Baird & Co., said in a Dec. 21 report. “Positively, industry contacts broadly indicate November and early December trucking demand was stable and consistent, relative to typical seasonal expectations.”

Comments from individual fleets signaled that the fourth quarter unfolded as expected.

“Volumes are hanging in there,” YRC Worldwide CEO James Welch told Transport Topics. “Volumes are staying pretty steady” at the national and regional units.

Landstar System CEO Henry Gerkens said on a Dec. 8 conference call that freight volumes rose about 9% into early December over 2010 fourth-quarter levels, in line with the expectations.

While the late December reports were mostly favorable, trucking analysts remain cautious about 2012 freight volumes.

Credit Suisse analyst Christopher Ceraso projected freight volume growth of about 2% in 2012, far below the pace over 11 months, as reported by ATA.

There was “greater demand risk, given a maturing economic cycle,” Hartford said in his report. “Shippers have reacted to potential demand uncertainty through lean inventory strategies.”

Lean inventory could turn out to help freight demand, Hartford said, but only if there is enough sustained demand from consumers and manufacturers to spark replenishment.

The actual amount of freight handled, as measured by ATA’s not seasonally adjusted index, was 115.3 in November, or 2.6% below the previous month.

ATA also said in its latest report that the month-to-month improvement was 0.4% in October, rather than 0.5% in an earlier ATA report.