Slow going ahead

Slow going ahead

The trucking industry will continue to face a sluggish freight environment in the new year as a number of economic indicators remained on a downswing as 2007 drew to close

The trucking industry will continue to face a sluggish freight environment in the new year as a number of economic indicators remained on a downswing as 2007 drew to close.

While truck tonnage increased a scant 0.8% in November, according to data compiled by the American Trucking Assns. (ATA), truckload freight overall remained 1.7% lower by November 2007 compared to the same point in 2006.

ATA economist Tavio Headley noted that the slowdown in tonnage volumes is projected to continue into 2008.

“Based on the latest economic data and the expected slowdown in the economy over the next few quarters, we anticipate lackluster freight volumes at least through the first half of 2008,” Headley said, adding that the November tonnage reading suggests continued volatility and softness in freight volumes, despite the month-to-month and year-over-year gains. Headley also noted that every monthly increase in the seasonally adjusted tonnage index since March 2007 was followed by a contraction the next month.

Broader economic indicators don’t look any rosier. Daniel North, chief economist with credit insurer Euler Hermes ACI, said the seasonally adjusted Credit Manager’s Index (CMI) fell for the fourth consecutive month in December 2007, dropping 0.7%.

“While the manufacturing index actually gained 0.8%, it was overshadowed by a loss of 2.3% in the service index,” North said. “The deterioration in the combined index matches that of other major indicators in the macro-economy, including disappointing holiday sales, a weakening employment market, accelerating declines in housing prices, downgrades of banks and insurers, plummeting consumer confidence, and a rapid increase in delinquencies and defaults on many types of credit.”

Overall unemployment figures in the U.S. also rose at year’s end, according to a Department of Labor report. After falling to 4.7% in November from 4.8% in October, unemployment spiked in December 2007, rising to 5%, the agency said.

Finally, the automotive industry sees sales contracting in 2008-- not good for trucking, as automakers provide a steady source of freight volume.

Jim Farley, Ford Motor Co.’s group vp for marketing and communications, said the company’s December 2007 sales were down 9% compared with the same period in 2006, with retail sales down 13% and fleet sales falling 1%. Ford expects the economic environment to remain challenging in 2008, expecting U.S. auto sales to be in the range of 15.5 to 16 million units in the first half of 2008. He sees light vehicle sales in the range of 15.2 to 15.7 million units.

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