Tonnage Dips 2.3% in August
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Truck tonnage in August declined 2.3% compared with year-ago levels but inched up sequentially for the second consecutive month, an indication that the worst of trucking’s freight recession may have passed, American Trucking Associations said Sept. 19.
“The evidence is growing that tonnage hit bottom in April and continues its slow climb upwards,” ATA Chief Economist Bob Costello said in a statement accompanying the release of the monthly For-Hire Truck Tonnage Index for August. “However, year-over-year comparisons remain difficult as tonnage peaked in September of last year.”
The seasonally adjusted index for August equaled 115.3, down from 119 in August 2022. On a month-to-month basis, the index increased 0.2% compared with July. That follows a 1.1% sequential uptick from June to July, a two-month trend Costello views as a positive for the industry. Still, he warns that a broader recovery will take some time.
“It is unlikely that tonnage turns positive compared with a year earlier for at least a month or two longer,” he said in the release. “Most recently, freight continues to be mixed, with consumer spending and factory output flat to down.”
The ATA index is dominated by contract freight as opposed to spot market freight. ATA calculates the tonnage index based on surveys from its membership. The report includes month-to-month and year-over-year results, relevant economic comparisons and key financial indicators.
Trucking represents 72.6% of tonnage carried by all modes of domestic freight transportation, including manufactured and retail goods, says ATA. Trucks hauled 11.46 billion tons of freight in 2022. Motor carriers collected $940.8 billion, or 80.7% of total revenue earned by all transportation modes.
Another monthly report, the Logistics Managers’ Index, in August showed a slow return to growth after three consecutive months of contraction and five straight months of registering new, all-time low scores. The LMI’s authors say the index reading of 51.2 is the fastest rate of expansion since February. In the same month a year ago, the LMI was 59.7. Month-to-month, the LMI increased 5.8% from 45.4 in August.
“It is not yet clear whether this move back towards expansion is a one-off deviation from the contraction we had been seeing or represents a pivot back towards expansion,” said Arizona State University business professor Dale Rogers, one of the report’s authors. “However, it does appear that the increase in activity we observed in the second half of July has spilled over into August. When taken together with other anecdotal evidence and metrics that will be discussed below, it seems that a move back towards continued expansion is quite possible. This move is fueled by a slight tightening in the transportation market and continued growth in warehousing and inventory costs.”
Researchers at Arizona State University, Colorado State University, Florida Atlantic University, Rutgers University and the University of Nevada, Reno, in conjunction with the Council of Supply Chain Management Professionals issue their report every month.
A number below 50 indicates contraction, while one more than 50 indicates growth.
Officials who compile the LMI said they are closely watching to see which carriers acquire many of the assets of the now-bankrupt Yellow Corp. because that will have an impact on overall capacity in the industry.
“This was a unique opportunity as the level of well-placed terminals rarely hit the open market,” Rogers said. “We have said repeatedly in past reports that the freight recession will not end until excess capacity exits the market, but Yellow’s exit has not been a panacea. There is still clearly an imbalance in supply and demand with excess capacity suppressing prices, but the issues are not as severe as they previously had been.”
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Another index, the FTR Transportation Intelligence report, released Sept. 20 by the company, showed the depths of how the trucking market slumped throughout the summer. In its July figures, FTR said that number was negative 5.34, compared with a reading of negative 0.70 in the same month a year ago. However, the July number showed an improvement from June’s figure of negative 6.29.
FTR Vice President of Trucking Research Avery Vise said he anticipates the Trucking Conditions Index and others will continue to show negative growth for several more months, well into 2024 before there is a significant uptick.
“Improved freight volume and capacity utilization offset weaker freight rates and higher fuel costs,” Vise said. “Carriers continue to face challenging market conditions, and surging fuel prices in August and September will send the TCI even lower in the near term. Aside from fuel cost volatility, the outlook for trucking conditions is little changed with only gradual improvement toward neutral readings by the third quarter of 2024.”
Vise added that the overall freight market remains unfavorable for trucking companies, but the financial situation for smaller carriers in particular is tightening due to surging diesel prices. Large numbers of small operations are exiting the market, and that exodus could accelerate if diesel prices continue to rise sharply.
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