January truck tonnage readings post modest gains, reports ATA

Truck tonnage volumes saw modest gains, in January, to begin 2020, according to data issued today by the American Trucking Associations (ATA).

The ATA’s advanced seasonally-adjusted (SA) For-Hire Truck Tonnage Index for January—at 117.4 (2015=100)—saw a 0.1% increase from December to January, following a 0.5% from November to December. And compared to January 2019, the SA index increased 0.8%, coming on the heels of a 3.1% annual gain in December. For all of 2019, SA tonnage rose 3.3% over 2018.

The ATA’s not seasonally-adjusted (NSA) index, which represents the change in tonnage actually hauled by fleets before any seasonal adjustment and the metric ATA says fleets should benchmark their levels with, was 114.6 in January, marking a 1.1% improvement over December. December’s NSA reading was down 2% compared to November’s 115.1 reading.

ATA officials said that the organization’s tonnage data is “dominated by contract freight,” which they have often observed is performing significantly better than what a called a plunge in spot market freight in 2019.

“Over the last two months, the tonnage index has increased 0.6%, which is obviously good news”, said ATA Chief Economist Bob Costello in a statement. “However, after our annual revision, it is clear that tonnage peaked in July 2019 and, even with the recent gains, is down 1.8% since then. Softness in manufacturing and elevated inventories continue to weigh on the truck freight tonnage.” 

ATA’s data is consistent with commentary from Dr. Jeffrey Rosenweig, Associate Professor of Finance; Director, The Robson Program for Business, Public Policy, and Government, at Emory University, made at the SMC2 Jump Start 2020 conference in January.

The current forecast is that [the economy] will still grow, nobody is forecasting a recession just yet,” he said. “But U.S. GDP may slow down to under 2%.”

While retail sales and consumer confidence remain strong, Rosenweig said that manufacturing, a sector that, in some ways, is viewed as a proxy for freight activity, may already be falling into recession in the U.S. and in other major global economies, too.

At the same event, Robert W. Baird & Co. transportation analyst Ben Hartford said that with freight growth rates expected to bottom in 2020 and a tough first half of the year expected and a pending bid season approaching, less bad growth rates are in the forecast for the back half of 2020, with the caveat that industrial activity will play a key role in whether that plays out or not, Hartford reiterated.

From a supply standpoint, Hartford said truckload supply is expected to continue to leave the market, coupled with stabilizing demand supply reduction is expected to support load factors, utilization rates, and help support pricing growth through 2020.

“Consumer demand remains solid, and industrial activity is showing some signs of bottoming,” he said. “The reality is it is a long cycle, a slow growth cycle. The reality is economic cycles don’t die of old age, they tend to be killed by sharp spikes in energy prices or inversions in the yield curve. We are near all-time cycle highs for consumer confidence, though. Consumer confidence tends to be the last to give up the ghost immediately before a recession. What triggers that are the sharp spikes in energy prices.”