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Tonnage remains steady

Tonnage remains steady

Despite a decrease in overall freight volume and other risks, analysts suggest the chance of a recession remains minimal

Despite a decrease in overall freight volume and other risks, analysts suggest the chance of a recession remains minimal.

While the number of shipments has declined, tonnage has remained relatively steady. In addition, there is no evidence that consumers are reducing spending. In fact, August was a strong month for the retail industry, as stores such as Target and Kohl’s reported substantial growth. This won’t necessarily translate into an increase into extra tonnage due to the way industry has streamlined transportation and eliminated inefficient routes.

“The risks of a recession have increased in the past few months, but the Fed has reacted to that, hopefully alleviating the credit crunch,” analyst Chris Brady, president of Commercial Motor Vehicle Consulting, told FleetOwner. “Export volumes have increased, and will continue with the decreasing of the U.S. Dollar.”

While most retailers have seen growth, industries directly or indirectly related to residential construction have contributed to a drop in freight volume. “However, general merchandise is still growing and department sales are still growing, so there’s no reason to think we’re heading into a recession due to slow freight volume,” Brady said.

“Freight tonnage for the industry will not change materially for the rest of the year,” analyst Satish Jindel, president of SJ Consulting, told FleetOwner. “Tonnage, not the number of shipments, is unlikely to change even if the economy stays where it is.”

For the holiday season, the outlook for retail sales is relatively conservative, as more and more customers are sending gifts directly and bypassing the stores entirely. This should lead to an increase in business for package and express haulers.

Despite a conservative outlook on the holidays, there will still be the customary large surge in freight during that time. “In November and December, Americans can pull the rabbit from the hat to come up with money to buy holiday gifts,” noted Jindel.

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