The roads and rails were busier in August compared to July, but an economist with the American Trucking Associations’ says the increase in tonnage hauled may not accurately reflect national economic health.
The American Trucking Associations’ Truck Tonnage Index was up 1.4% in August after a a 0.6% dip in July. Year-to-date, the index is up 5% compared to the same period in 2012.
The not-seasonally adjusted index, which represents the real change in tonnage hauled by the fleets, equaled 131.3 in August, which was 1.5% above the previous month.
“The strength in tonnage continued again in August, with the index increasing in three of the last four months,” ATA Chief Economist Bob Costello said in a statement. “The improvement corresponds with a solid gain in manufacturing output during August reported by the Federal Reserve last week.”
Trucking serves as a barometer of the U.S. economy, representing 67% of tonnage carried by all modes of domestic freight transportation, including manufactured and retail goods, according to the ATA. Trucks hauled 9.2 billion tons of freight in 2011. Motor carriers collected $603.9 billion, or 80.9% of total revenue earned by all transport modes.
Costello said the recent months of tonnage increases “is probably overstating the robustness of the economy” and health of the trucking sector.
“It just so happens that the sectors of the economy that are growing the fastest – in housing starts, auto production, and energy output, primarily through hydraulic fracturing – produce heavier than average freight, leading to accelerated growth in tonnage relative to shipments or loads,” he explained.
Costello also said truckload shipments are flat for the year, and less-than-truckload shipments are up less than 1.5% year-to-date.
The Cass Freight Index reported that shipments were up 1.7% in August, but freight expenditures were down 1.5%.
“The August decline is due more to the mix of commodities shipped in August than to lower rates. Despite this month’s decrease, 2013 expenditures are 3.4 percent higher than a year ago. Cumulatively, 2013 freight payments are up 3.6 percent,” according to Rosalyn Wilson, a supply chain expert and senior business analyst with Vienna, Va.-based Delcan Corp., who provides economic analysis for the Cass Freight Index.
Cass uses data from $22 billion in annual freight transactions processed by its information processing division to create the Index. The data comes from a Cass client base of 350 large shippers.
Wilson said the 1.7% increase in August shipments compared to July support “the prediction that 2013 will have a peak holiday shipping season, even if it is little more than a bump in volume.”
The Cass report also noted that railroad traffic was up 6% in August compared to July, and intermodal shipments were up 6.5%.
Wilson said the trucking industry may soon face a problem of not enough equipment to meet demand.
“The trucking industry is still in a precarious balance, with over 95 percent capacity utilization and an abundance of regulatory and cost pressures that indicate a looming capacity problem. The tricky part is forecasting when demand will actually exceed capacity. The economy is growing slowly enough that the tipping point remains just on the horizon,” Wilson said.