The American Trucking Assns. (ATA) expects truck capacity will be at least as tight this fall as it was during autumn 2005, in spite of a decline in its for-hire truck tonnage index in June.
Truck tonnage slid 0.7% after gains of 2% and 0.4% in April and May, respectively. Tonnage was actually 1.9% lower in the first half of the year compared to the same period last year. However, this doesn’t indicate there’s been any loosening of capacity.
“What’s important isn’t necessarily freight volumes but revenues,” Bob Costello, ATA chief economist told FleetOwner. “And revenues are still growing strong and we think that will continue. There is no reason to think fall volumes won’t be as tight or tighter as they were last fall.
“We’re not in an recession mode,” Costello added. “The tight capacity was also apparent as both LTL and TL carriers generally expanded second quarter profits compared to 2Q 2005. Revenues are growing even excluding fuel surcharges. We’re measuring weight so it could mean they’re hauling less loads or that the weight per load is coming down.”
The lower tonnage report comes as second quarter U.S. gross domestic product grew 2.5%, which was a sharp decline from the robust 5.6% growth in the first quarter.
“The economy has slowed some from the first quarter of this year,” Costello said. “However there continues to be a favorable supply-demand market. Also, considering the growth in manufacturing production, especially in durable goods products, we expect to see a strong fall freight season.”
In fact, according to the Institute for Supply Management (ISM), growth in the manufacturing sector picked up in July.
“Manufacturing growth accelerated in July driven by an upswing in production following June’s increase in new orders,” stated Norbert J. Ore, chair of the ISM manufacturing business survey committee.The ISM index rose 0.9% points to 54.7%. Any reading above 50 generally indicates growth. The supplier-deliveries component of the ISM report was at 55.4, which indicates slowing delivery rates and tighter truck and transportation capacity.