Near-term metrics indicate that freight volumes remain on the upswing, however the longer-term tonnage picture remains cloudy for trucking. According to TransCore’s North American Freight Index, the January truckload (TL) spot market notched a record amount in this metric’s 30-year history-- recording a 62% year-over-year increase in TL freight availability.
Load availability in January – typically a seasonally slow period for freight – declined by just 2.8% compared to December 2010.TransCore noted that is a very a small dip compared to the nominal 15% average month-over-month decline from December to January recorded over the past decade.
Rates increased on the spot market for all truck types in January as well, according to TransCore’s Truckload Rate Index. Compared to January 2010, dry van rates increased by 14%, flatbed rates rose by 11% and refrigerated rates were up by 6%.
Compared to December, 2010, however, rates declined for all truck types in January: reefer van rates decreased 3.4%, dry van rates fell by 1.6% and flatbed rates were one cent per mile lower.
Still, considering that January is typically a very slow month for truck freight, the numbers are better than average. The Ceridian-UCLA Pulse of Commerce Index (PCI), for example, fell 0.3% in January, giving up some, but retaining much of, December 2010’s 1.8% sequential gain. On a year-over-year basis, the PCI increased 3.4% in January-- making it the fourteenth straight month of year-over-year growth.
“Some of December's growth was driven by an unusually strong performance during the week between Christmas and New Year’s,” explained Ed Leamer, chief PCI economist and director of the UCLA Anderson Forecast. “This combined with the treacherous winter storms likely detracted somewhat from the January result. However, when viewed in the context of a three-month moving average, the PCI clearly shows that the economic recovery remains on track.”
He emphasized that record-breaking snowfalls experienced in many parts of the U.S. this winter is affecting freight volumes. From a regional perspective, Leamer said the heavily traveled Northeast and North Central regions of the nation were hit particularly hard, experiencing a "category 3" snowstorm from January 9 to January 13, and data shows that trucking was off by about 1% to 2% during this affected time.
Yet over the longer term, these firm freight numbers don’t necessarily indicate that the ongoing economic recovery is picking up a big head of steam, cautioned Craig Manson, senior vp and index expert for Ceridian, which provides the fuel purchasing data that goes into the PCI.
From an absolute standpoint, based on PCI data trends, U.S. gross domestic product [GDP] is now slightly ahead of the previous peak reached in the fourth quarter of 2007, he explained.
But the PCI is still about 5% below its previous peaks, meaning that the goods producing component of GDP is yet well below its previous high. “So we are not yet seeing PCI growth robust enough to drive meaningful gains in employment,” Manson stressed.
Based on their experience and the PCI data, both UCLA’s Leamer and Ceridian’s Manson suggest that there could be major revisions coming to the inventory and import related components within the U.S. Bureau of Economic Analysis' initial GDP report for the fourth quarter of 2010.
"Growth comparisons for the PCI on a year-over-year basis -- particularly in the first half of the year-- remain difficult,” noted Manson. “Nevertheless, our outlook for 2011 is for continued economic recovery and we expect GDP to grow at the historically ‘normal’ rate of 3%, accompanied by a persistent level of high unemployment.”