Tonnage in April Drops 3.4% Year-Over-Year
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Tonnage slumped 3.4% last month to 112.7 when measured against the same period a year ago, and dipped 1.7% compared with March results, according to ATA’s seasonally adjusted For-Hire Truck Tonnage Index. The index was 115.8 in April 2022.
ATA Chief Economist Bob Costello said the year-over-year decline is the largest decrease since February 2021. The April annual decline follows a 2.4% year-over-year drop in March.
“While the broader economy continues to surprise and thus far stave off an expected recession, the freight economy is starkly different,” Costello said. “The goods portion of the economy is soft, and as a result even contract truck freight is now falling, albeit not nearly as much as the spot market.”
Costello added, “The tonnage index hit the lowest level since September 2021 in April and has now fallen on a year-over-year basis for two straight months.”ATA’s For-Hire Truck Tonnage Index is dominated by contract freight as opposed to spot market freight.
The federation calculates the tonnage index based on surveys from its membership and has been doing so since the 1970s.
According to ATA, trucks hauled 10.93 billion tons of freight in 2021. Motor carriers collected $875.5 billion, 80.8%, of total revenue earned by all transport modes.
This is a preliminary figure and subject to change in the final report issued around the fifth day of each month. The report includes month-to-month and year-over-year results, relevant economic comparisons and key financial indicators.
Meanwhile, another key indicator of the trucking and freight industry is showing the dramatic slowdown.
The Logistics Managers Index in April barely stayed in positive territory at 50.9, down from March’s 51.1. One year ago, the LMI reading was 69.7.
“The conditions in the freight market and overall economy are very similar to what we saw in 2019 when we had a freight recession,” Arizona State University professor Dale Rogers said. “COVID was the thing that finally broke the freight market out of this cycle due to the pressure it put on increased spending on goods, allowing carriers to utilize the excess capacity they had built up in the preceding years.
“Ideally, a global pandemic will not be necessary to end this ongoing freight recession. Freight recessions end when there is either balance between supply and demand or if demand eventually starts to outstrip supply.”
Rogers said the Federal Reserve’s decision to raise interest rates to their highest level in 40 years to fight inflation is slowing the economy and that’s impacting the movement of big-ticket items by trucks.
“Slowness in the housing market driven by high interest rates has brought the shipment of bulky products like appliances and furniture to a standstill,” Rogers said. “When the Fed finally pauses its program of interest increases and rates can stabilize, volume will flow back into the market. The issue is that no one, not even the Fed, is sure when this will happen.
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“Until then, there is simply too much unpredictability for firms and consumers alike to have the confidence required to make the big-ticket purchases that will drive volumes and rebalance the freight market.”
Researchers at Arizona State, Colorado State University, Florida Atlantic University, Rutgers University and the University of Nevada-Reno compile the report each month in conjunction with the Council of Supply Chain Management Professionals.
The National Retail Federation said that while trucking numbers were declining, consumers’ situation maybe improving.
Retail sales bounced back in April, showing month-over-month and year-over-year growth, NRF said May 23.
“Moderating price levels, continued labor market strength and wage gains have increased consumers’ ability to spend,” said Matthew Shay, CEO of NRF. “However, they remain cautious and concerned about the current economic environment. Retailers continue to provide competitive pricing and convenience to help cost-sensitive consumers stretch their budgets.”
NRF said its calculation of retail sales, which does not include automobile dealers, gasoline stations and restaurants and focuses on core retail, showed a 0.6% increase from March and is up 2% unadjusted year-over-year.
In March, sales were down 0.7% month-to-month but up 3.4% year-over-year on an unadjusted basis.
“Consumers remained engaged in April,” NRF Chief Economist Jack Kleinhenz said. “Shoppers are being selective and price-sensitive, but we continue to expect that spending will see modest gains through the course of the year. Year-over-year growth slowed, which was partly because of upward revisions to last year’s data but also an early indication that credit conditions are tightening and excess savings are shrinking.”
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