ARLINGTON, Va.¡ªTruck tonnage is continuing its bumpy ride, as evidenced by the American Trucking Associations¡¯ (ATA) recent announcement that its advanced seasonally-adjusted For-Hire Truck Tonnage Index dropped 1.6 percent in August, following a revised 0.9 percent decrease in August.
This decline represents the second straight monthly drop since April, and it is the largest month-to-month drop since March, according to the ATA. The seasonally-adjusted For-Hire Truck Tonnage Index in August was 113.6 (2000=100), which was its lowest reading since November 2007. The ATA¡¯s not seasonally-adjusted index was down 3.4 percent to 115.0 in August compared to July. But the ATA said it was 2.6 percent higher than August 2007, which is its tenth consecutive year-over-year increase. On a year-to-date basis, the ATA said that the For-Hire Truck Tonnage Index is up 3.4 percent compared to the first eight months of 2007, with tonnage contracting 1.7 percent in 2006 and 1.5 percent in 2007.
ATA Chief Economist Bob Costello said in a statement that freight slowed down in July and August preceding an expected slowdown in economic activity.
¡°We are forecasting a mild recession later this year and early next year,¡± said Costello. ¡°Make no mistake about it, freight volumes are weakening.¡± He added that Costello that year-over-year growth in the index is simply the result of soft tonnage volumes in 2007.
The current situation in regards to declining tonnage totals matches up well with previous predictions Costello made earlier this year, when he said that truck tonnage totals were likely to slow down, with the overall economy expected to be weak in the fourth quarter of 2008 and the first quarter of 2009.
This situation has to the potential to be exacerbated due to the recent Wall Street fallout caused by mortgage-backed investments, which could likely further dampen the prospects for any type of rebound in domestic and global economic activity.
Despite a sluggish economy and the possibility that the US is in a recession, Costello said in a Stifel Nicoloaus conference call in July that as a leading economic indicator and with the subject of a recession prevalent, truck tonnage was in and out of recession before the aggregate economy ever entered into one during the last two recessions in 1991 and 2001.
"There are times when truck tonnage goes down, and the U.S. economy does not go into recession," said Costello. "That may in fact happen with this go-around, although I think it is looking more likely we may see a technical recession. But the Index is a good leading economic indicator."
Stephens Inc. analyst Thom Albrecht wrote in a research note that the current trucking tonnage slump began in August 2006 and after a recovery in recent months deteriorated last month. With the 3.4 percent month-to-month decline in the not seasonally-adjusted index¡ªcoupled with what he said is a 4.1 year-to-date decline in that index¡ªbeing the second year-over-year decline since September 2007, Albrecht said this data is considered more useful, because it is what truckers haul.
Round one of the downturn was about housing and consumer weakness,¡± wrote Albrecht. ¡°Round two may be about industrial and international weakness.¡± He added that freight anecdotes have materially deteriorated since early August and the trends are worsening in September, and it is occurring both sequentially and on a year-over-year basis.
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.
Trucking serves as a barometer of the US economy, because it represents nearly 70 percent of tonnage carried by all modes of domestic freight transportation, including manfactured and retail goods, according to the ATA. The ATA notes that trucks hauled 10.7 tons of freight in 2006, and that motor carriers collected $645.6 billion¡ªor 83.8 percent¡ªof total revenue earned by all transport modes.
