Mixed news on freight

Mixed news on freight

Shipping conditions have improved marginally even as evidence mounts that rate increases are beginning to take hold as a result decreased productivity because of the new hours-of-service (HOS) rules, according to FTR.

FTR said its Shippers Conditions Index, which measures factors affecting shippers’ transport environment, rose 0.8 points in September to a reading of -7.9. Any reading below zero indicates a less-than-ideal environment for shippers.

At the same time, the American Trucking Assns. (ATA) is reporting that tonnage in September rose less than it originally reported. ATA said For-Hire Truck Tonnage index for September was up 0.5%, less than the preliminary 1.4% gain initially reported. In October, the index fell 2.8%, but was up 8% year-over-year.

According to FTR, truckload carriers are reporting HOS-related productivity declines in the range of 3-5%. Because of this, tightening capacity is expected, which is why FTR doesn’t believe the slight increase in the shippers’ index will hold going forward.

“The productivity effects of the HOS revisions are coming in about where we expected and rates are beginning to move upward in response,” said Larry Gross, senior consultant for FTR. “However, we are hearing anecdotes from carriers regarding experienced drivers who are becoming fed up with the lack of flexibility and personal control over where and when they can take their extended rest period and are turning in the keys to their truck for good.  We have not included such driver losses in our projections and therefore our view of the anticipated effects of the HOS revisions may have been understated.”

ATA said the October For-Hire Truck Tonnage Index was 124 (2000=100), the lowest it’s been since April. Year-to-date, though, the index is up 5.5%.

The not seasonally adjusted index, which represents the change in tonnage actually hauled by the fleets before any seasonal adjustment, equaled 133 in October, which was 4.9% above the previous month (126.9).

 “From May through September, the index surged 3.5%, including only one monthly decrease over that period,” said Bob Costello, ATA chief economist. “It isn’t surprising for volumes to fall back some after such a good run. 

“Despite October’s month-to-month decrease, we saw a very robust year-over-year increase and I’m seeing some good signs out of the trucking industry that suggests the economy may be a little stronger than we think,” he added. “Specifically, the heavy freight sectors, like tank truck, have been helping tonnage this year. But in the third quarter, generic dry van truckload freight saw the best quarterly gains since 2010. I view this positively for the economy. I view it positively for trucking. Now, we have to see if it continues.”

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