A national trucking sector struggling through economic ups and downs hit the middle in July with no change in the American Trucking Associations’ Truck Tonnage Index.
The index, considered a barometer of the U.S. economy, didn’t move in July after a slight 1.1% increase in June. Compared with July 2011, the seasonally-adjusted Truck Tonnage index was 4.1% higher, which was the largest year-over-year gain since February 2012. Year-to-date, tonnage was up 3.7%.
“July’s reading reflects an economy that has lost some steam, but hasn’t stalled,” ATA Chief Economist Bob Costello said in a statement. “Certainly there has been some better economic news recently, but I continue to believe we will see some deceleration in tonnage during the second half of the year, if for nothing else but very tough comparisons on a robust August through December period in 2011.”
Following is the track of Index changes during the first seven months of 2012.
July: no change
June: up 1.1%
May: down 0.7%
April: down 1.1%
March: up 0.6%
February: up 0.5%
January: down 4.6%
Costello said a slowdown in new factory orders will reduce manufacturing output, which will impact truck freight volumes. He’s also closely watching a recent increase in the national inventory-to-sales ratio.
“Unintended gains in inventories will hit trucking negatively as the supply chain works off stocks,” Costello explained.
Costello kept his 2012 tonnage outlook in the 3% to 3.5% range. Annual Tonnage index gains during 2010 and 2011 were 5.8%, according to the ATA.
According to the ATA, trucking serves as a barometer of the U.S. economy, representing almost 70% of tonnage carried by all modes of domestic freight transportation, including manufactured and retail goods. Trucks hauled 9.2 billion tons of freight in 2011. Motor carriers collected $603.9 billion, or more than 80%, of total revenue earned by all transport modes.
‘SLOW ANNUAL GROWTH’
The Cass Freight Index (CFI), produced by St. Louis-based Cass Information Systems, provides a less-than-rosy picture about the remaining months of 2012. According to the CFI, freight volumes year-to-date (January-July) are up 1.8% compared to the 2011 period.
“And, this should be considered within the context that the decline from June to July of 2011 was much steeper than this year’s decline,” according to the CFI report for July. “The slow annual growth is not surprising given the extremely slow growth of the U.S. and global economies. ... The last three years since the recession ended are actually the three slowest consecutive years of economic growth, outside of a recession or depression, since 1930.”
The CFI report for July included the following points of economic analysis.
• GDP growth was only 1.8% for the first half of the year – not enough to spark the economy. Uncertainty is plaguing the economy with both consumer and business confidence flagging.
• Credit remains tight and many businesses are reporting that they are going to put off spending and investment until 2013.
• Much of the employment gain has been in temporary or part‐time workers, because businesses are not willing to commit to full‐time employees.
• Worries about expected tax cuts in January after the elections are also slowing business orders for durable goods.
• Retail sales should be returning to positive growth with back‐to‐school and end of summer sales coming up. It does not appear that the economy has sufficient momentum for the second half of 2012 to grow faster than in the first half.
Cass uses data from $20 billion in annual freight transactions processed by its information processing division to create the Index. The company processes transactions for about 350 large shippers who represent a broad sampling of industries including consumer packaged goods, food, automotive, chemical, OEM, retail and heavy equipment.