• More slow but steady growth in tonnage

    A slow yet steady increase in freight tonnage, coupled with an earlier-than-expected tightening of truck capacity, is making analysts more confident that the trucking industry is on the road to recovery
    June 1, 2010
    2 min read

    A slow yet steady increase in freight tonnage, coupled with an earlier-than-expected tightening of truck capacity, is making analysts more confident that the trucking industry is on the road to recovery.

    The American Trucking Assns. (ATA) said its for-hire truck tonnage index increased for the sixth time in the last seven months, gaining another 0.9% in April, following a 0.4% increase in March. Year-to-date, tonnage is up 6% compared with the same period in 2009, the ATA reported.

    “Truck tonnage volumes continue to improve at a solid, yet sustainable, rate,” said Bob Costello, ATA chief economist. “Tonnage is being boosted by robust manufacturing output and stronger retail sales [which] fits with a sustained economic recovery.”

    “These numbers are right in line with our projections for the freight market; things are behaving as we expected,” Eric Starks, president of research firm FTR Associates, told FleetOwner. “The one thing that’s happening sooner than we expected is a tightening of [trucking] capacity. We originally thought that would occur in late 2010; instead, it’s happening now.”

    As a result, Starks said he’s “getting pretty bullish” about the freight sector based on the numbers he’s seeing. That confidence is derived in part by improvement in other economic metrics that directly affect freight volumes.

    For example, the Institute for Supply Management’s (ISM) said that while its Purchasing Managers Index (PMI) registered 59.7%, a 0.7 percentage point decrease when compared to April’s reading of 60.4%, anything in excess of 42% over a period of time generally indicates an expansion of the overall economy.

    “The past relationship between the PMI and the overall economy indicates that the average PMI for January through May (58.9%) corresponds to a 5.7% increase in real gross domestic product (GDP),” said Norbert Ore, ISM chairman. “In addition, if the PMI for May (59.7%) is annualized, it corresponds to a 6% increase in real GDP annually.”

    More importantly for trucking, ISM said its data indicates manufacturing inventories contracted in May for the second consecutive month as the group’s inventories index registered 45.6%, which is 3.8 percentage points lower than the April reading of 49.4%.

    This is important as lower inventory levels often lead to higher freight demand, as companies across the economy seek to restock their supplies.

    “This is good stuff,” noted FTR’s Starks.

    About the Author

    Sean Kilcarr

    Editor in Chief

    Sean Kilcarr is a former longtime FleetOwner senior editor who wrote for the publication from 2000 to 2018. He served as editor-in-chief from 2017 to 2018.

     

    Voice your opinion!

    To join the conversation, and become an exclusive member of FleetOwner, create an account today!

    Sign up for our free eNewsletters

    Latest from Operations

    Oxy
    Occidental Chemical, known as OxyChem, produces indispensable chemicals internationally. This small private fleet covers about 2.5 million miles annually, delivering products to customers across the U.S.
    Members Only
    Leadership and training turned this chemical bulk hauler into one of the safest fleets in the U.S. Intensive training and experience pay off for Oxy's Occidental Chemical transportation...
    249455233 | Siwakorn Klomwinyarn | Dreamstime.com
    trucking internal promotions
    By recognizing and developing your internal talent today, you lay the foundation for stronger, smarter fleet operations tomorrow.
    4126654 | Phartisan | Dreamstime.com
    driver retention
    Turnover and its causes are expenses we like to ignore or accept as the cost of running a trucking company. In a market like today’s, investing in retention doesn’t mean spending...