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posted on 26 August 2016

Trucking Data Sending Mixed Messages in July 2016

Written by Steven Hansen

Truck shipments were rmixed in July (depending on whose data one uses) - even the BLS employment data remained weak but did improve relative to the previous month. There is no question that the data here is soft, but the trend lines are mixed.

ATA Trucking

The American Trucking Associations' (ATA) trucking index decreased 2.1 % in June, following a 1.6 % decline in June.

From ATA Chief Economist Bob Costello:

On a monthly basis, tonnage has decreased in four of the last five months and stood at the lowest level since October during July. This prolonged softness is consistent with a supply chain that is clearing out elevated inventories.

Looking ahead, expect a softer and uneven truck freight environment until the inventory correction is complete. With moderate economic growth expected, truck freight will improve the further along the inventory cycle we progress,

Truck tonnage this month

z truck.jpg

Compared with one year ago, seasonally adjusted tonnage increased 0.3 %.

Econintersect tries to validate ATA truck data across data sources. It appears this month that jobs growth says the trucking industry employment levels were up month-over-month. Please note using BLS employment data in real time is risky, as their data is normally backward adjusted (sometimes significantly).


This data series is not transparent and therefore cannot be relied on. Please note that the ATA does not release an unadjusted data series (although they report the unadjusted value each month - but do not report revisions to this data) where Econintersect can make an independent evaluation. The data is apparently subject to significant backward revision. Not all trucking companies are members of the ATA, and therefore it is unknown if this data is a representative sampling of the trucking industry.

source: ATA

Weak Q1 Economics Pull FTR's Trucking Conditions Index Up in April

FTR's Trucking Conditions Index (TCI) for June, at a reading of 2.92, continues from the previous month in a low trough due to slow freight and a lull in new regulations. Even with negatives affecting the trucking sector, the reading remains above zero which is the break point between good and bad conditions. The TCI is currently forecast to rise into next year as the capacity constraining effects of new regulations are calculated in.

Jonathan Starks, Chief Operating Officer at FTR, commented that, "While not overly positive, the June TCI reading of 2.9 indicates that trucking operators are still doing OK - not great, but OK. Trucking rates, especially for the dry van segment, have moved notably lower over the last 9 to 12 months, but recent data indicates that both contract and spot rates may have hit bottom and could be moving back up. This would be a strong catalyst as we begin to enter the final preparations of the ELD mandate set for late 2017. We are hearing that many shippers, and fleets, are looking to implement technology well in advance of the due date in order to have time to mitigate any issues that arise from its deployment. We are also seeing that the extra capacity that was in the system following the 2014 reversion of the HOS rules has been mostly eliminated, and that any change in HOS or in improving economics could quickly tighten up the market like we saw in 2014."

source: http://www.ftrintel.com/news/latest-tci/index.php

CASS FREIGHT INDEX REPORT

July's Cass Freight Index confirmed that overall shipment volumes (and pricing) are persistently weak, with increased levels of volatility as all levels of the supply chain (manufacturing, wholesale, retail) continue to try and work down inventory levels. That said, there have been a few areas of growth, mostly related to ecommerce, with lower levels of expansion being experienced in transit modes serving the auto and housing/ construction industries. All of this added up to slightly lower shipment volume in July, the seventeenth straight month of year‐over‐year decline.

We continue to assert the trucking industry provides one of the more reliable reads on the pulse of the domestic economy, as it gives us clues about the health of both the manufacturing and retail sectors. We should note that as the first industrial‐led recovery (2009‐2014) since 1961 came to an end, and the shift from 'brick and mortar' retailing to e‐commerce/omni‐channel continues, we are becoming more focused on the number of loads moved by truck and less focused on the number of tons moved by truck. Tonnage itself appears to be growing (three‐month moving average +2.75% not seasonally adjusted, +3.24% seasonally adjusted). Counter to this, truck loads have contracted on a YoY basis three out of six months in 2016, with June posting the worst comp since December 2012 (‐4.4%). No matter how it is measured, the data coming out of the trucking industry has been both volatile and uninspiring.

Source: http://www.cassinfo.com/Transportation-Expense-Management/Supply-Chain-Analysis/Cass-Freight-Index.aspx

Summary

Although the data for trucking does not correlate, we can assume trucking growth is sluggish - but the trends are mixed.



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