October Truck Tonnage Falls 5.2%

This story appears in the Nov. 30 print edition of Transport Topics.

U.S. truck tonnage fell 5.2% in October, yet posted the best year-over-year performance since November of last year, as analysts said signs of a lasting economic recovery were uneven.

The October slip to 103.6 in American Trucking Associations’ seasonally adjusted index was an improvement over the 7.3% year-over-year decline in September, but total tonnage still fell for the 13th straight month. Tonnage dipped 0.2% from September to October, and 0.3% from August to September.

“The trucking industry should not be alarmed by the small decreases in September and October,” ATA Chief Economist Bob Costello said in the Nov. 23 report, noting that the U.S. economy is still trying to gain balance as it climbs out of recession.

“The economy is behaving as expected, with starts and stops,” he said. “This is being reflected in truck tonnage, as well as most economic indicators. Retail sales and manufacturing output are exhibiting mild upward trend lines, which is the path I expect truck freight to take.”

Some fleets reported an improving trend in October.

Both Bob Peterson, president of flatbed carrier Melton Truck Lines, Tulsa, Okla., and Royal Jones, chief executive officer of truckload fleet Mesilla Valley Transportation, Las Cruces, N.M., said October 2009 volume, measured in miles per tractor per day, rose 8% above October 2008.

“Last year, we took the big dive in October,” Jones told Transport Topics. “Now, the economy is starting to turn. People are starting to buy. Inventory is very tight.”

Jones said inventory restocking by retailers, along with aggressive sales and some competitors weakened by shaky finances, combined to make October the truckload carrier‘s strongest month of 2009.

“Business conditions are still very difficult,” Peterson said. “We saw the worst of it earlier this year. It has basically been two steps forward and one step back.”

“The economy is finding a firmer footing,” said Peterson. “Customers are far from ebullient, but we are starting back. It won’t take much more freight for us to vault forward.”

Many indicators from other sources for September-October volumes were consistent with the uneven patterns of ATA’s tonnage index, which rose 1.6% to 109.6 but not seasonally adjusted.

TransCore, a load-board operator, reported a 2.3% decline in total freight volume from September to October, better than the 23% September-to-October drop last year as the recession deepened. TransCore said its spot market freight availability improved for a fourth consecutive month and was 9% higher in October 2009 than it was a year earlier.

The Cass Freight Index, published by a St. Louis firm that processes freight bills, showed a 4.5% drop in shipments from September to October and a 2.3% drop in spending.

Still another indicator was the Robert W. Baird freight index. The report by Baird analyst Jon Langenfeld said October trailed September by 7.7%.

“Through November, we will likely see continued modest seasonality as freight trends appear to have improved slightly ahead of the holiday season,” Langenfeld said. “Moving past the end of the peak season, we expect the next several months to reflect uneven results with a sustained recovery not expected until mid-2010.”

George Post, director of global marketing of UPS Supply Chain Solutions, said that many sectors of the U.S. economy, especially retailers, still were being very cautious.

“Nonetheless, we’re looking forward to a nice recovery this year,” Post told TT. “We all suffered through a difficult 18 months.”

Contributing to the weak freight pattern during the fall months was the lack of a large holiday bulge.

 “One important factor is that the usual peak holiday season in trucking that has traditionally gone from late August to just before Thanksgiving just hasn’t been appearing for several years,” Ira Rosenfeld, spokesman for UPS Freight, the less-than-truckload division of UPS, told TT.

During the December holiday peak, UPS said it expects to handle 22 million U.S. packages on its busiest day, about 5% more than last year. FedEx spokeswoman Carla Boyd said worldwide volumes are expected to grow to 13 million packages from 12 million packages on its busiest day.

Other analysts agreed that few signs of freight growth were imminent.

Stifel, Nicolaus & Co. analyst John Larkin said in a Nov. 20 report that he expected that “demand will bounce along the bottom in most freight markets during the next six months.” Industry fundamentals will improve in the second half of next year, Larkin said in his report.

Credit Suisse analyst Christopher Ceraso was more optimistic about 2010 in his Nov. 13 report, saying inventory restocking and other forces would provide a first-half freight surge and push annual volume up 1.3% from this year.

Tonnage growth in the months ahead should be modest and inconsistent because manufacturing and consumer spending aren’t booming, said ATA economist Tavio Headley, who noted that ATA doesn’t provide forecasts for tonnage trends.

Staff reporter Frederick Kiel contributed to this report.