Truck tonnage not only rose in December, but it climbed at an astonishing rate. The American Trucking Assn.’s advanced seasonally adjusted (SA) For-Hire Truck Tonnage Index leapt 6.8% in December after rising 0.3% in November 2011. This latest gain puts the SA index at 124.5 (where 2000=100) in December-- up from the November level of 116.6.
For all of 2011, stated ATA, tonnage rose 5.9% over the previous year – marking the largest annual increase since 1998. Tonnage for the last month of the year was 10.5% higher than December 2010, for the largest year-over-year (YoY) gain since July 1998. And November tonnage was up 6.1% over the same month last year.
ATA noted that the not seasonally adjusted index, which represents the change in tonnage actually hauled by the fleets before any seasonal adjustment, equaled 116.4 in December-- 0.8% above the previous month.
“While I’m not surprised that tonnage increased in December, I am surprised at the magnitude of the gain,” said ATA Chief Economist Bob Costello. He pointed out that it was the largest month-to-month increase since January 2005.
“Not only did truck tonnage increase due to solid manufacturing output in December,” Costello added, “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.”
According to Peter Nesvold, an analyst with Jefferies Equity Research Americas, the surge in truck freight was “likely reflecting strong bulk tank volumes and a weather-related jump in construction activity.
“Our channel checks suggest that pockets of weakness started to emerge for TL (truckload) freight in late December and into January. We're starting to take a more neutral view on transportation stocks, after a big equity move and as selected transportation indicators have moderated.”
Nesvold pointed out that In December, ATA's truck tonnage index, which includes data from TL and less-than-truckload (LTL) carriers, increased at its fastest YoY pace in nearly 14 years, “likely reflecting stronger chemical loads (which is heavier freight and is being boosted by the surge in fracking demand) and the unseasonably warm winter, which appears to have aided some construction activity”
He said “robust” LTL tonnage gains also contributed, although it was to a lesser extent since LTL tonnage represents significantly less tonnage than the TL market. “For full-year 2011,” he remarked, “truck tonnage increased 5.9% YoY — its largest annual gain since 1998 and modestly above the high end of our +3% to +5% YoY expectations.”
According to Nesvold, the current trends in tonnage closely resemble a "typical" truck cycle. “We compared this current tonnage cycle to our truck composite model, which aggregates truck tonnage data over the past 40 years, and we found that this tonnage cycle has been unremarkable in a historical context.
“Based on how devastating the Great Recession was,” he continued, “we expected to see huge swings in truck tonnage relative to the ‘typical’ tonnage cycle. What we found, however, is that this tonnage cycle has been in line with historical trends. Furthermore, the current truck cycle is 96% correlated with our truck composite model.”