Truck Tonnage Growth Slows

ATA’s Sept. Index Up 0.8%, But Outlook Dims

By Jonathan S. Reiskin, Associate News Editor

This story appears in the Nov. 3 print edition of Transport Topics.

Growth in U.S. truck tonnage slowed significantly in September as the national economy contracted during the third quarter, and a major freight-matching service said last week the spot market for truckload service fell well below year-ago levels as the fourth quarter got under way.

American Trucking Associations said Oct. 27 its September tonnage index grew by 0.8% to 112.6 from September 2007. However, the index is down 3.4% since June, including a 0.8% drop from a month earlier (9-29, p. 1; click here for related Premium Content story).

“I anticipate truck freight volumes to continue to fall before they improve,” said Bob Costello, ATA’s chief economist. “It is a tough freight market, and there is nothing on the horizon that says this will change anytime soon.”

TransCore’s 3sixty Freight Match load board experienced a 22% decline in load postings in October from September for shippers seeking trucks, said David Schrader, a senior vice president. He said this October was 25% below October 2007.

“October was the first month this year where we saw a year-over-year decline in postings. October 2007 was the first up-tick we saw, so it had been a full 12 months since then.

“We saw a little slowing in late September, and it continued through October,” Schrader said.

In another ominous omen for trucking, the Commerce Department said Oct. 30 in its initial estimate that the nation’s economy, measured by gross domestic product, contracted 0.3% on an annual basis during the July-to-September quarter. If later revisions don’t turn positive, it would be the first GDP contraction since last year’s fourth quarter, when GDP shrank at a 0.2% annual rate.

ATA’s Costello said he thinks the United States is now in a recession that will last into the first quarter of 2009. Two consecutive quarters of negative GDP are generally considered a recession.

The ATA tonnage survey compares business activity to an index level of 100 for the year 2000. The index has grown year-over-year since November 2007, but from June to September this year the growth has been declining.

Several carrier representatives confirmed freight volumes have been declining.

“We’ve seen a significantly slower fall. Clearly, there are market issues with the economy,” said Tonn Ostergard, chief executive officer of Crete Carrier Corp., Lincoln, Neb. Not only have shippers made substantial progress in flattening out seasonal shipping swings, Ostergard said, “but this year there’s more of a true decline on top of that.”

Beyond pure tonnage, Ostergard said Crete is hauling loads shorter distances than before, and that means his sales staff has to find more loads just to break even on revenue.

“Business is soft and truckload carriers are struggling to find loads,” said Ray Haight, executive director of MacKinnon Transport, Guelph, Ontario, and chairman of the Truckload Carriers Association. “Companies are scrutinizing costs to the ‘nth’ degree, although the decline in fuel prices is a form of relief,” he said.

Averitt Express, Cookeville, Tenn., was busier in July than August, “and that’s never happened in our history since I’ve been here,” said Phil Pierce, the less-than-truckload carrier’s executive vice president for sales and marketing. He said growth in the company’s shipment numbers peaked in June, decelerated in July, turned negative in August and has worsened since then.

Averitt’s smaller truckload division did not show signs of softness until early October, Pierce said.

There are some islands of growth in the heavy-haul sector, said Mike Card, president of Combined Transport, Central Point, Ore. Road building material, electric transformers and windmills all are showing some strength, he said, although he conceded the overall freight environment is “tough and getting tougher.”

Card said hauling windmills can be lucrative. A typical field of windmills has 100 towers, and each generates six or seven heavy-haul loads.

Although his company has suffered housing-related freight declines, Card said he is hopeful that may finally be nearing the bottom. He cited a late-October Commerce Department report that showed new-home sales rose 2.7% in September from a 17-month low the month before.

In the automotive region near the Great Lakes, freight hauling is tightly linked with the fortunes of particular plants, said Kevin Burch, president of truckload carrier Jet Express, Dayton, Ohio. He said production related to Chevrolet’s Malibu model is very stable, but plants making less-popular cars in Wisconsin and Ohio have closed or soon will.

“We’re seeing quite a bit of variability weekly and even daily,” said Jim Ward, president of D.M. Bowman Inc., Williamsport, Md.

“Until the last few years there was a peak season this time of year, but freight is more flat now, and we’re not seeing the normal up-tick from retail,” Ward said.