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March 20, 2019 2:15 PM, EDT

February Tonnage Up 5.4%

Trucks on highway John Sommers II for Transport Topics

American Trucking Associations’ seasonally adjusted For-Hire Truck Tonnage Index in February was 117.4, a gain of 5.4% from the same period a year ago.

Sequentially, however, the index was down 0.2% after increasing 2.5% in January when the index was 117.6.

“After a strong January, I’m pleasantly surprised that the index didn’t fall much last month,” said Bob Costello, ATA chief economist. “I continue to expect tonnage to moderate like other indicators, including retail sales, manufacturing activity and housing starts. Additionally, the level of inventories throughout the supply chain have increased, which is a drag on truck freight.”

Trucking serves as a barometer of the U.S. economy, representing 70.2% of tonnage carried by all modes of domestic freight transportation, including manufactured and retail goods, according to ATA.

Trucks hauled 10.77 billion tons of freight in 2017, the federation said. Motor carriers collected $700.1 billion, or 79.3%, of total revenue earned by all transport modes.

Results for the 2018 haul will be released in June, Costello said.

Kenny Vieth, president and senior analyst of ACT Research, agreed the freight boom seen in 2018 may be moderating or slowing down.

“It’s still very strong,” Vieth told Transport Topics. “But we’re seeing some stagnation in freight-related metrics.”

He pointed to the Cass Freight Shipment Index, which dropped 2.1% in February year over year. The index measures North American freight volume and expenditures for all domestic freight modes and is derived from $28 billion in freight transactions processed by Cass annually for hundreds of large shippers.

Vieth said trucking accounts for about 80% of the amount.

Cass, which calculates the index, also raised concerns. “While we are still not ready to turn completely negative in our outlook, we do think it is prudent to become more alert to each additional incoming data point on freight flow volume,” it said of the February results.

Cass in December logged its first negative report in 24 months, followed by another in January. However, it was dismissive of December’s decline of 0.8% year-over-year as well as the decline of 0.3% in January since the comparable year-ago periods were all-time highs.

While these numbers paint a stark contrast to 2018 — when spot rates were through the roof and tonnage reports were strong — Vieth said the news doesn’t necessarily mean recession. He cited the oft-used term among economists of “the return of balance,” meaning the vibrant freight environment that once favored the trucking industry may now be showing more or equal favor to the shippers. Vieth said he sees that balance returning with limited freight growth in 2019.

“We may be closer to equilibrium,” added Peggy Dorf, a market analyst at DAT Solutions. “It looks like there may be more (trucking) capacity in the market.”

That increased capacity decreases pressure on prices, she said, as trucking firms can accept more loads, or a bigger share of cargo.

Tonnage

Dorf said DAT, which operates load boards that match shippers and carriers, also saw a decline in the spot market for prices from January to February. But like ATA’s tonnage numbers, the year-to-year figures were up; Dorf said spot prices rose 3% from February 2018 to February 2019, making her “cautiously optimistic” for March. However, she added, inclement weather in the Midwest could shrink results in April.

Railroads also are struggling with the weather, so the problems are not confined to trucking, she noted. But the kind of freight the railways have been moving of late — petroleum, metals and paper — indicate a good market for trucks in the spring, she said.

Still, economist Noel Perry at Transport Futures said he is pessimistic about the freight market turning things around and growing stronger in 2019, mostly because of the overall U.S. economy. Perry said the 10-year-old economic recovery has been a weak one, while the freight recovery was stronger and better. “We are now late in a recovery, and at the end of a recovery freight tends to stagnate,” he said.

Perry said economists are discussing when the U.S. economy will contract into a recession for the first time since 2009, adding some believe this could happen as early as 2020.