Tonnage Up 2% in April for Sixth Consecutive Month

Carrier Executives Report Mixed Results
This story appears in the June 2 print edition of Transport Topics.
By Jonathan S. Reiskin, Associate News Editor

U.S. truck tonnage rose 2% in April from a year ago, the sixth straight increase in monthly volumes, according to a preliminary report from American Trucking Associations. At the same time, the survey’s director said the industry still faces difficulties because fuel prices are extraordinary and “the overall economy remains very soft.”
The May 22 ATA report said its tonnage index rose to 114 in April, compared with 111.8 for the same month in 2007. At the same time, the March figure was revised upward significantly to 115.3, compared with 113.6 the year before (5-5, p. 1; click here for previuos Premium Content story).
While the seasonally adjusted ATA freight index is topping last year’s meager levels, it also has been decelerating since reaching a high point in January. The mixed signals are consistent with recent statements by fleet managers.
ATA’s chief economist, Bob Costello, said year-over-year growth in the index is always welcome news, but underlying causes for worry remain substantial. “Truck tonnage hasn’t grown since January of this year on a month-to-month basis, suggesting the overall economy remains very soft,” Costello said, adding that the index’s strength now “is due to easy comparisons from 2007.”
ATA’s index compares business activity with the base year 2000, which is assigned a level of 100. ATA constructs the index around a monthly survey of its motor carrier members.
Truckload executives at an investors’ conference in late May in New York said business is starting to look encouraging, and the operator of a major freight-matching service said shippers are posting more loads to be hauled. However, the chairman of the Truckload Carriers Association said many of his members are struggling to find loads while trying to survive record diesel fuel prices.
“We’re not even seeing last year’s volumes,” said TCA Chairman Ray Haight, who also is executive director of MacKinnon Transport, Guelph, Ontario. “Some sectors, such as refrigerated, are holding their own, but general freight is feeling the crunch.”
Haight said that even with a high level of first-quarter trucking bankruptcies (4-21, p. 3), there is still an abundance of freight-hauling capacity.
“In April, we saw a continuation of year-over-year trends,” said David Schrader, a TransCore vice president who works with the Beaverton, Ore., company’s 3sixty freight-matching service.
“We saw a 57% increase in load postings, compared with April 2007, and the preliminary number for May looks like we’ll be up 21%,” Schrader said.
While the company’s overall postings argue for improvement, Schrader said comments during a recent TransCore customer symposium were mixed.
“Some said they saw an uptick and others said, ‘No, we’re not seeing that.’ But anecdotally, I think capacity is tightening and we’re continuing to see improvement,” Schrader said.
At the recent Wolfe Research Transportation Conference in New York, truckload executives expressed cautious optimism.
“Tonnage has been all over the board,” said Jerry Moyes, chairman and chief executive officer of Swift Transportation Co. “For-hire truckload has been very erratic . . . but retail and manufacturing [freight] is holding up pretty good.
“In retail, our customers are doing very well,” Moyes said, “but the housing market is very, very soft . . .”
“Business is fairly strong in the larger company [longhaul truckload operations],” said Max Fuller, co-chairman and CEO of U.S. Xpress Enterprises. “We are in an overbooked situation. Revenue is up 2 cents a mile, while deadhead is down 2%.”
“We have started seeing a firming in the business in April,” said David Parker, Covenant Transportation Group’s chairman and CEO. “Revenue per truck is up 2%. The next two or three months will show something to us.”
Meanwhile, the Commerce Department said May 29 that first-quarter growth in the economy was larger than originally estimated. U.S. gross domestic product expanded at an annualized rate of 0.9%, rather than the 0.6% stated in late April.
The annualized growth rate for the fourth quarter of last year was 0.6%.
Costello said he expects a contraction in the economy during the current quarter ending June 30, followed by a significant increase during the third quarter.
“That’s from the stimulus checks,” he said.
The benefits could well be short-lived, though, as many forecasters are predicting more slow growth at the end of this year and the start of 2009. Costello said he does not foresee normal, more vigorous growth coming until the second quarter of next year.
Other economic reports show durable goods orders fell 0.5% in April, less than the 1.5% fall analysts had predicted, and excluding orders for transportation equipment, orders rose by 2.5%, Commerce said.
Sales of new homes increased by 3.3% in April, the agency said, while the National Association of Realtors reported a 1% fall in the sale of existing homes during the same month.
Senior Reporter Rip Watson contributed to this story.