Tonnage Surges 7.4% in April
Tonnage saw a big surge in April, according to American Trucking Associations, even as spot rates and volumes declined in the same month, according to other surveys.
Compared with April 2018, the seasonally adjusted index increased 7.7%, the largest year-over-year gain since July 2018.
ATA’s advanced seasonally adjusted For-Hire Truck Tonnage Index increased 7.4% in April after decreasing 2% in March.
In April, the index equaled 121.8 (2015=100) compared with 113.4 in March, according to ATA’s May 21 report.
The not seasonally adjusted index, which represents the change in tonnage actually hauled by fleets before any seasonal adjustment, equaled 117.7 in April, 1% above March’s level (116.6), according to ATA Chief Economist Bob Costello.
“The surge in truck tonnage in April is obviously good for trucking, but it is important to examine it in the context of the broader economy,” Costello said in a news release. “February and March were particularly weak months, as evidenced by the 3.5% dip in tonnage due to weather and other factors, so some of the gain was a catch-up effect. In addition, the Easter holiday was later than usual, likely pushing freight that would ordinarily be moved in March into April.”
The strong April 2019 numbers, compared with April 2018, happened because 2019’s month-over-month performance was so strong, Costello told Transport Topics.
“In fact, it was on a tough year-over-year comparison because April 2018 was a good month, too,” Costello said.
Costello said April’s tonnage should put off fears of a freight recession.
“I do not think the fundamentals underlying truck tonnage are as strong as April’s figure would indicate, but this may signal that any fears of a looming freight recession may have been overblown,” Costello said.
Yet the tonnage report mixes in with an April report by DAT Solutions that indicated spot prices and volumes dipped.
DAT reported April saw strong volumes and abundant capacity in spot market truckload freight. The volumes for dry van freight — the most common semi-trailer type — increased 2.4% in April compared with a year earlier, according to DAT, which operates the largest truckload freight marketplace in North America.
But despite sustained volume, the national average spot van rate fell 35 cents per mile year-over-year due to readily available truckload capacity.
“Spring came late to the spot market this year,” DAT senior industry analyst Mark Montague said in the May 13 report. “Late-season snowstorms in Minnesota and Colorado, as well as flood-related damage in and around Nebraska, led to delays in truck and rail traffic.”
Some spot market service providers are growing rapidly this year, and that growth offsets losses in other sectors, according to DAT.
Month-over-month trends followed a familiar seasonal pattern: DAT reported its Truckload Freight Volume Index declined 5% for van freight in April compared with March, and the national average spot rate of $1.81 per mile was 4 cents lower. These seasonal declines mirror three of the past five years, DAT officials reported.
Contributing to the decline was a delay in spring produce, which affected refrigerated equipment, DAT reported.
Refrigerated volumes were down 11% in April compared with March. That is not a typical seasonal trend for April, DAT said, and the volume shortfall was accompanied by a 2-cent drop in the average spot rate for reefer freight, to $2.15 per mile. On a year-over-year basis, reefer volume slipped 2.9%, and the national average rate dropped 28 cents per mile, DAT reported.
Flatbed load volume remained strong in April, DAT said, losing only 0.9% as rates edged down by 1 cent compared with March, to $2.33 per mile. Year-over-year, flatbeds hauled 9.1% more loads for 31 cents less per mile.
“Overall freight availability remained high in April compared with recent years, despite the small seasonal decline,” Montague said in the report. “As we head into peak season for spot market freight, we expect regional capacity shortages to emerge and boost rates higher through the end of the second quarter.”
But another major freight analyst said April’s numbers are cause for concern. On May 15, Cass Information Systems Inc. issued its monthly freight report, stating North American freight volumes declined in April, year-over-year, for the fifth straight month, signaling “a possible economic contraction.”
The report’s author, Donald Broughton, wrote that U.S.-China trade disputes and an economic softening are likely real issues, despite the report of strong economic growth in the first three months of 2019.
April freight movement was down 3.2% from a year before, Cass reported.
“With April down 3.2%, we see material and growing downside risk to the economic outlook,” the report said. “The initial first quarter of 2019 gross domestic product report of 3.2% suggests the economy is growing faster than is reflected in the Cass Shipments Index.”
One longtime freight analyst said DAT and Cass numbers are consistent with “late recovery” numbers, meaning the economic expansion, which began almost 10 years ago in July 2009, after the Great Recession, could be coming to an end.
“Disappointing but not a disaster,” said Noel Perry, an economist with Transport Futures, speaking to TT. “We’re back to normal with average spot numbers.”
Perry said freight numbers have fallen since the high numbers of 2018, but he stopped short of calling a recession soon.
“The good times are over,” Perry said, adding trucking will see its usual seasonal peak in June. And contract rates will remain high for another three to six months, as they usually lag spot rates, he said.
Perry said he is bearish about 2020 and said risks will be bigger next year. Now is a good time to set aside some cash, as prospects for growth will not be strong in 2020 and 2021, Perry said.
Costello said 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.
The DAT Truckload Freight Volume Index is based on load counts and per-mile rates recorded in DAT RateView, with an average of 3 million freight moves per month, according to DAT Solutions.