Truck Tonnage Increases 4.8% in April for 17th Straight Year-Over-Year Gain

This story appears in the May 30 print edition of Transport Topics.

Truck tonnage continued its steady growth last month, rising 4.8% above April 2010 volumes, the 17th straight year-over-year gain, American Trucking Associations reported.

ATA said May 25 that its advance seasonally adjusted index reached 114.9 in April. It said the gain was slower than the 6.5% year-over-year growth posted in March and that the index was down 0.7% when comparing April with the prior month.

Still, the tonnage index has shown an increase of about 3% so far this year above the 111.6 reading that closed out 2010. Over the past 12 months, including April, the average year-over-year increase in tonnage was 5.6%.

Month to month, ATA’s tonnage index readings now have risen twice and fallen twice in 2011.

The latest reading came amid less-than-stellar economic reports. For example, the Commerce Department said first-quarter gross domestic product grew at a 1.8% annual pace, a sharp slowdown from the 3.1% growth clip in the fourth quarter, in part because of weaker consumer spending.

Orders for goods lasting three or more years also declined.

Despite those reports, ATA chief economist Bob Costello remained upbeat.

“I expect economic activity, and with it truck-freight levels, to grow at a moderate pace in the coming months and quarters,” Costello said. “Lower fuel costs will help freight volumes and motor carrier bottom lines going forward.”

Diesel prices have declined 12.7 cents per gallon and oil about $10 per barrel over the past three weeks.

Costello also said he wasn’t concerned about the 0.7% drop in tonnage from March, saying that “freight volumes are so volatile, truck tonnage is unlikely to grow every month, even on a seasonally adjusted basis.”

Stronger volumes have particularly helped fleets with tank operations, including Dupre Logistics, Lafayette, La.

“Our revenue dollars — excluding fuel surcharge in our asset-based businesses — were up 20% in April 2011 versus April 2010,” Tom Voelkel, president of Dupre, told Transport Topics on May 25. “We attribute this to increased volumes due to economic growth, rate increases that have been put in place since April 2010 and the addition of organic growth with current and new clients.”

Industry analysts saw some positive elements in the latest tonnage report because it showed a steadier growth pattern.

The April report was “encouraging,” BB&T Capital Markets analyst Thom Albrecht wrote in a May 25 report, since recent anecdotal comments had suggested weakening freight activity over the past two months.

“We are comfortable with how freight volumes are unfolding,” Albrecht’s report said, noting that recent volumes on load boards have been “in sync with historical seasonal patterns.”

For example, the May 26 weekly report from load board operator TransCore, Portland, Ore., showed little change in availability of freight or trucks, signaling the return to historical patterns described by Albrecht.

“After two years of violating seasonal patterns (2009 on the way down and 2010 on the way back up), a return to traditional seasonality is welcome, overdue and totally normal,” Albrecht’s report said.

Jefferies & Co. analyst Peter Nesvold continued to forecast 2011 tonnage growth of between 3% and 5%.

The significance of the 0.7% month-to-month decline in the seasonally adjusted index is questionable, Albrecht said, because the timing of the Easter holiday in 2011 on April 24 affected freight volumes. Flooding in central and southern states also hurt business activity, he noted.

ATA said its unadjusted index, based on actual tonnage carried by fleets, was 113.6 in April, 8% below March.

The drop in durable goods orders stretched across the product spectrum, with lower demand for machinery, fabricated metals, electrical equipment and computers and related products,

the Commerce Department reported May 25. The decline, excluding equipment such as aircraft, was 1.5% after a rise of 2.5% in March.

The latest business reports prompted some economists to modestly lower their projections about future economic growth.

“Manufacturing is likely to moderate from the explosive pace of growth in the past few months,” Stephen Stanley, chief economist at Pierpont Securities LLC in Stamford, Conn., told Bloomberg News.

Economists at JPMorgan Chase & Co. in New York on May 24 cut their second-quarter U.S. growth projection to 2.5% from 3%.

“The main factor behind our revision is weaker output of the auto vehicle sector,” JPMorgan’s chief U.S. economist Michael Feroli wrote in an e-mail to Bloomberg News. Feroli attributed part of that sector’s slowdown to supply-related disruptions from the Japanese tsunami and earthquake two months ago and the subsequent nuclear-reactor crisis.

While manufacturing has been relatively strong, troubles continued in the housing market.

New home sales remain depressed, though the Commerce Department reported a 7.3% increase from the record low in March.

Also last week, prices of homes as measured by the Federal Housing Finance Agency fell 2.5%, stretch-ing the decline in that measure to 16 consecutive quarters.