Truck Tonnage Falls 5% in March
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Truck tonnage experienced its steepest declines since 2020 amid slowdowns across multiple sectors, American Trucking Associations announced.
The ATA For-Hire Truck Tonnage Index fell 5% in March to 111.6 on a seasonally adjusted basis compared with 118.8 a year ago. The index fell 5.4% on a sequential basis compared with a reading of 118 in February. The year-over-year decline was the first since August 2021.
During the first quarter of this year, tonnage dipped 0.6% compared with the first three months of 2022.
“After increasing a total of 2.6% during the three previous months, March’s sequential decline was the largest monthly drop since April 2020 during the start of the pandemic,” ATA Chief Economist Bob Costello said in an April 18 news release. “Falling home construction, decreasing factory output and soft retail sales all hurt contract freight tonnage — which dominates ATA’s tonnage index — during the month. Despite the largest year-over-year drop since October 2020, contract freight remains more robust than the spot market, which continues to see prolonged weakness.”
In calculating the index, 100 represents 2015.
Costello told Transport Topics that the combination of the March tonnage numbers and myriad economic indicators point to the U.S. economy inching toward recession.
“I heard from a lot of fleets that freight was soft in March, and that is exactly what the numbers showed,” he said. “In general, retail sales have had a bit of a headwind, especially when you consider the overstocked inventory. Retailers have worked that off, and that means less freight to move. Manufacturing production is in contraction territory, and housing especially has been soft. So it’s coming at us in all different ways.”
Costello added, “I think we’re going into a recession. The Federal Reserve has gone on the most aggressive interest rate policy stance in 40 years. I’d be shocked if this doesn’t cause a recession, and I expect it to."
Truck #tonnage decreased 5.4% in March -- the largest monthly drop since April 2020 during the start of the pandemic.— American Trucking (@TRUCKINGdotORG) April 18, 2023
Falling home construction, decreasing factory output & soft retail sales all hurt contract freight tonnage, says @ATAEconBob.
More here: https://t.co/VNhli2mPNK pic.twitter.com/IG72cmx2qd
Trucking serves as a barometer of the U.S. economy, representing 72.2% of tonnage carried by all modes of domestic freight transportation, including manufactured and retail goods. Trucks hauled 10.93 billion tons of freight in 2021. Motor carriers collected $875.5 billion, or 80.8% of total revenue earned by all transport modes, ATA said.
ATA calculates its monthly tonnage index based on surveys from its membership, and has been doing so since the 1970s.
Costello added that the contract market is sustaining the downturn better than the spot freight sector.
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"Contract freight — even with this significant drop — is holding up more than the spot market,” he said. “The spot market is where extra freight goes and there is no extra freight.”
Another transportation index also recorded a slowdown in the overall economy last month.
The Logistics Managers Index eked into positive territory at 51.1 in March, down 3.6% from February’s reading of 54.7. The March number is the lowest in the 6.5-year history of the index.
The LMI rating is compiled through a combination of logistics components, including inventory levels and costs, warehousing capacity, utilization, and prices, and transportation capacity, utilization, and prices. The index is calculated using a diffusion index, in which any reading above 50 indicates that logistics activity is expanding; a reading below 50 is indicative of a shrinking logistics industry.
“The overall economy continues to be somewhat mixed,” Arizona State University professor Dale Rogers said. “Things are clearly slower than they have been, but it does not seem that we are in an official recession. The U.S. economy grew at a pace of 2.6% in Q4 2022, which is slightly lower than what was expected. Inflation was up 5% year-over-year, but at a slower pace than what we saw in January’s 5.3%.”
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.
Specifically to the trucking industry, Rogers see a slowdown in cargo activity.
“The freight recession that has been discussed over the last few months seems to have reared its head in March,” he said. “There is still some hope that the freight market will pick back up later in 2023, but the optimism that many carriers had been reporting for the second half of 2023 seems to have faded somewhat. While many still anticipate some growth, many are pessimistic that 2023 will see a return to the busy times of 2020-2021.”
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