September Tonnage Rises 5.1%, Posting 10th Consecutive Gain

This story appears in the Nov. 1 print edition of Transport Topics.

Tonnage hauled by U.S. truckers in September was 5.1% greater than what they carried in the same month a year ago, the 10th consecutive month that loads have grown when compared with year-ago results, American Trucking Associations said last week.

The seasonally adjusted September tonnage reading of 108.7 was also 1.7% higher than in August, ATA said Oct. 26.

ATA’s top economist noted that the U.S. trucking industry is “significantly smaller” than it was before the recession — an indication that the industry’s healthy earnings in recent months reflect an equilibrium of truck capacity with tonnage levels rather than raw economic growth.

“While I am glad to report that tonnage grew in September, the fact remains that truck freight volumes leveled off over the summer and early autumn,” ATA Chief Economist Bob Costello said. “This is a reflection of an economy that is barely growing.”

ATA revised its August tonnage data to indicate the volume dropped 2.8% from July, a slightly larger month-to-month drop than initially reported and the biggest sequential decline since March 2009.

Several industry officials mirrored Costello’s view of the economy and freight growth.

During an Oct. 27 conference call with analysts and investors, Stephen Russell, chief executive officer of truckload carrier Celadon Group Inc., said that “the overall demand levels don’t seem to be picking up at this point.”

Russell noted what he called “a significant change in the relationship of supply and demand in the longhaul segment,” where tractor counts have fallen as carriers seek smaller, nimbler fleets to cope better with a level of demand that is still nowhere near pre-recession levels. Celadon, for example, trimmed its fleet by 159 tractors in the quarter ended Sept. 30, the first period of the company’s 2011 fiscal year.

“I would agree with the statement that the economy is barely growing,” said G. Clifton Parker, president of truckload carrier G&P Trucking Co. in Gaston, S.C. “Since June, there has been this up-and-down trend [and] our customers are still cautious,” he told Transport Topics on Oct. 27.

Also last week, C.H. Robinson Worldwide, the largest freight broker in the country, said that, while its third-quarter truckload volumes were up about 40% year-over-year, carriers remain hesitant to add capacity.

Carriers are wondering “if the freight demand and pricing will be there to generate the return on [their] capital investment,” said John Wiehoff, chairman and president of Robinson.

Other economic reports released last week showed a mixed bag of demand-side news for truckers.

The Commerce Department said Oct. 27 that orders for durable goods in September rose 3.3% from August to $199.2 billion. However, excluding orders for transportation equipment — always a volatile factor — orders dropped 0.8%. Durables goods shipments in September declined 0.4% from August to $197.4 billion, Commerce said.

A separate Commerce report said that new-home sales in September reached a seasonally adjusted annual rate of 307,000 — 6.6% above August but 21.5% below September 2009. Last year at this time, federal incentives for first-time homebuyers were still in effect. New-home sales stoke demand for shipments of new appliances and household goods moves.

The Cass Freight Index, a barometer published by Cass Information Systems, shows that shipments rose 2.1% in September compared with August and about 15% compared with September 2009. Most of the shipments Cass tracks move by truck. Cass derives its shipment data from the freight bills it processes each month.

The Ontario Trucking Association said Oct. 27 that its members, like their U.S. counterparts, continued efforts to align trucking capacity with post-recession demand.

According to the results of a recent membership survey, “there are indications that capacity and volume appear to be coming more into line,” OTA said. “Almost three-quarters of respondents said that capacity had either decreased or stayed the same in the previous [third] quarter and expected the situation to remain almost identical over the next six months.”

Meanwhile, a New York-based stock analyst acknowledged that tonnage growth has moderated since spring, but he offered an optimistic view of fourth-quarter freight demand.

“Although the year-over-year truck tonnage growth rate has moderated from the recent peak in April 2010, we expect strong California import activity to help support truck tonnage near-term,” Justin Yagerman of Deutsche Bank wrote in an Oct. 26 investor note.

“September California port import volumes were up 23.1% year-over-year, which bodes well for trucking activity, as California imports are highly correlated to truck tonnage on a one-month lag,” he wrote.

ATA’s tonnage index uses freight hauled by federation members in the year 2000 as a baseline of 100.