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April 19, 2022 12:00 PM, EDT

Truck Tonnage Rises 3.8% in March

Trucks on highwayJohn Sommers II for Transport Topics

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March truck tonnage rose 3.8% compared with year-ago levels, and also posted a first-quarter gain over the same period in 2021, American Trucking Associations reported.

The ATA For-Hire Truck Tonnage Index for March reached 118.8, compared with 106.8 in March 2021. Year-to-date, tonnage is up 2.6% compared with Q1 2021.

On a month-to-month basis, the index was 2.4% higher than the 116.1 recorded in February.

The index equaled 100 in 2015.

ATA Chief Economist Bob Costello noted that the March result marked the seventh straight month of annual gains, and was the largest across that stretch.

“It is important to note that ATA’s for-hire tonnage data is dominated by contract freight, with minimal amounts of spot market loads,” Costello said. “And, clearly, contract freight was solid in March, witnessing the largest sequential gain since May 2020. March was also the eighth straight month-to-month improvement, with a total increase of 7.4% over that period.”

Costello said tonnage could have been higher last month had there been more drivers available to haul freight.

“During the first quarter, the index rose 2.4% from the final quarter of 2021,” he said. “While there might be some recent softness in the spot market, for-hire contract freight tonnage remains solid and is only limited by lack of capacity — both drivers and equipment — at contract fleets.”

In 2021 Costello said the industry needs at least 80,000 new drivers to keep pace with capacity needs, especially in the over-the-road sector of the trucking industry.

Trucking serves as a barometer of the U.S. economy, representing 72.5% of tonnage carried by all modes of domestic freight transportation, including manufactured and retail goods, according to ATA. Trucks hauled 10.23 billion tons of freight in 2020. Motor carriers collected $732.3 billion, or 80.4%, of total revenue earned by all transport modes.

The Logistics Managers' Index, compiled monthly by a group of academic and business leaders across the country, reached its highest-ever mark in March at 76.2. That compares with a reading of 72.2 a year ago and 75.2 in February. Any reading above 50 indicates that logistics is expanding; a reading below 50 indicates a shrinking logistics industry.

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Despite the gains, the report’s authors cautioned that rising transportation-related costs could signal an economic slowdown.

“The high costs of fuel may end up being the thing that finally slows down the runaway transportation market,” the report said. “The dramatic increase in fuel prices — diesel fuel is up approximately 44% in 2022 — seem to have put a relative damper on the previously insatiable freight demand.”

Spending activity may also be softening, they warned.

“Consumers had been willing to absorb some increase in costs through 2021. However, the rate of inflation through the first quarter of 2022 is at such a rapid pace, the stimulus money that buoyed spending last year is largely gone and consumer spending has shifted increasingly away from goods and toward services,” the report said.

Researchers at Arizona State University, Colorado State University, the Rochester Institute of Technology, Rutgers University and the University of Nevada, Reno, in conjunction with the Council of Supply Chain Management Professionals, manage the report.

The March report said retailers appear to be stockpiling inventory due to concerns about upcoming labor negotiations between the 20,000-member International Longshore and Warehouse Union and the Pacific Maritime Association. The current contract expires June 30.

The report also indicated March warehouse capacity dropped by 6.3% as demand for space looks to remain high in the near-term. Build-out times for warehouse construction are now at the two year mark, compared with nine months before the pandemic began.

Ken Adamo

Adamo

Meanwhile, the latest report from DAT Freight & Analytics found the spot market is showing signs of weakening, even as contract rates for moving freight remain strong.

“What made March unique is that shippers paid historically high prices to ensure that more of their loads moved under a longer-term contract, reducing their need for trucks on the spot market and causing rates to soften,” DAT Chief of Analytics Ken Adamo said. “At the same time, carriers’ operating costs increased because of higher fuel prices. As a national average, fuel cost $1.07 per gallon more in March compared to February and $1.95 a gallon year over year.” Adamo added smaller trucking companies and some independent owner-operators are feeling the squeeze of higher fuel prices.

The March Truckload Volume Index for dry van freight, which measures combined contract and spot market pick-ups, was 305, up 23% compared to February. The refrigerated TVI was 206, a 13% increase. The flatbed TVI was 247, up 24% month-over-month.