A sharp uptick in the truck tonnage numbers for the month of May, along with a bump-up in home sales for that month as well, are forming a nexus of positive economic indicators for the freight transportation industry.
The American Trucking Associations (ATA) for-hire truck tonnage index increased 6.5% in May, which followed a 1.5% decline during April. Compared to last year, the tonnage index this May is up 4.8%, which was the largest year-over-year gain since November of 2016, noted Bob Costello, ATA’s chief economist.
“After three straight declines totaling 2.6%, truck tonnage snapped back in May,” he said in a statement. “One month does not make a trend, but the nice gain last month fits more with the anecdotal reports I’ve been hearing from fleets, at least more so than three straight months of decreases.”
Despite that “robust jump” in May’s tonnage figures, Costello still expects only “moderate growth” going forward as key sectors of the U.S. economy continue to improve slowly.
One of those “improving sectors” is the housing market, where sales of existing homes rebounded in May after a notable decline in April, according to the National Association of Realtors (NAR). All major regions except for the Midwest saw an increase in sales for May, noted Lawrence Yun, NAR’s chief economist
"The job market in most of the country is healthy and the recent downward trend in mortgage rates continues to keep buyer interest at a robust level," he said in a statement. "Listings in the affordable price range are scarce, homes are coming off the market at an extremely fast pace and the prevalence of multiple offers in some markets are pushing prices higher."
Sean Monahan, a principal with global consulting firm A.T. Kearney, noted this week during a press event for the unveiling of the 28th annual State of Logistics report that, after a lackluster 2016, the global economy is expected to strengthen over the next two years.
The International Monetary Fund predicts 3.5% worldwide economic growth in 2017 as prospects brighten in key developed and emerging markets – an “improving outlook” that should lift consumer spending, a key driver of demand for logistics services, particularly in parcel, air freight, and third-party logistics, he explained.
“Stronger performance in the U.S. is a big factor in global growth expectations this year,” Monahan noted in the report. “Resurgent domestic demand lifted growth in the second half of 2016, and businesses added inventory to keep pace with anticipated sales growth.”
He explained that optimism carried over into 2017 as incomes rose, job prospects improved, household wealth increased, and inflation remained low.
“Consumer spending has averaged 4.5% monthly growth since last fall, and the National Retail Federation forecasts 3.7% to 4.2% retail sales growth in 2017,” Monahan added. “Retailers account for a big share of business at third-party logistics providers, while surging digital sales channels drive growth at parcel delivery companies and others involved in e-commerce fulfillment.”
