Trucking: ATA reports strong December tonnage finishes 2011 on a positive note

While the economic recovery remains far from complete, truck tonnage could be serving as a positive barometer of things to come, based on the American Trucking Associations’ (ATA) December and 2011 year-end truck tonnage data, which was released today.

Following November’s 0.3 percent gain for seasonally-adjusted truck tonnage to 116.6 (2000=100), the ATA reported that December checked in at 124.5 for a 6.8 percent increase. December 2011 was up 10.5 percent than December 2010, according to the ATA, and is the single biggest annual monthly gain since July 1998. It also outpaced November’s annual gain of 6.1 percent.

Prior to November, seasonally-adjusted truck tonnage was up 0.4 percent in October, up 1.5 percent in September, down 1.3 percent in both August and July and up 2.6 percent in June.

And the ATA added that in 2011, tonnage was 5.9 percent higher than 2010, marking the biggest annual increase since 1998.

The ATA’s not seasonally-adjusted (NSA) index, which represents the change in tonnage actually hauled by fleets before any seasonal adjustment, was up 0.8 percent in December at 116.4 and compared to December 2010’s 107.2 it was up 7.9 percent. The November NSA was 115.3, which was down 2.2 percent from October’s 118.5.

Some industry analysts maintain that the not seasonally-adjusted index is more useful, because it is comprised of what truckers haul. As defined by the ATA, the not seasonally-adjusted index is assembled by adding up all the monthly tonnage data reported by the survey respondents (ATA member carriers) for the latest two months. Then a monthly percent change is calculated and then applied to the index number for the first month.

“While I’m not surprised that tonnage increased in December, I am surprised at the magnitude of the gain (which was the largest month-to-month increase since January 2005),” said ATA Chief Economist Bob Costello. “Not only did truck tonnage increase due to solid manufacturing output in December, but also from some likely inventory restocking.  Inventories, especially at the retail level, are exceedingly lean, and I suspect that tonnage was higher than expected as the supply chain did some restocking during the month.”

Retail inventories have been lean since well before the holiday shipping season, due to the fact that retailers don’t want to be caught with extra stock following the holidays (which happened in early 2009), which, in turn, forces them to sell leftover stock at a sharp discount in the first quarter.

Strong domestic manufacturing output, though, has been a constant and is helping to spur decent, truck, rail, and intermodal volumes. What’s more, retail sales were remaining flat for the most part heading into the holiday season, coupled with the lack of a real 2011 Peak Season.

Despite the lack of a true Peak Season, though, many carriers told LM demand was steady, with the expectation that it would remain that way through the holidays. But in recent months, both shippers and carriers have said that even though things are relatively steady in light of an uncertain economy, a good amount of the momentum occurring in the market earlier in the year had dropped off.

Avondale Partners analyst Donald Broughton wrote in a recent research note that the future outlook for trucking volumes is strong, explaining that the most important leading indicators continue to point toward growth: lean inventories; the ISM PMI remaining in positive territory; tight capacity, coupled with carriers pushing out rate increases for the third straight year; and positive early holiday shopping trends.

And at last week’s SMC3 Jump Start 2012 Conference in Atlanta, shippers told LM that although capacity is tight, demand was solid overall through mid-December, adding that they are well-positioned to take on more capacity during the first half of 2012 as they rebuild inventories and the economy slowly improves.