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posted on 21 September 2016

Trucking Data Improved But Still Soft in August 2016

Written by Steven Hansen

Truck shipments improved in August - even the BLS truck employment data improved. But there remains a disconnect between reporting sources.

Analyst Opinion of Truck Transport

We previously only analyzed ATA trucking to get a feel of the truck transport sector. But their data was far from transparent, and it was at odds with truck employment data. ATA trucking data does not represent the entire industry - only a slice of it. This month the ATA truck data is saying there was a year-over-year improvement - I do not believe this is representative of the entire truck sector.

Now several sources are analyzed - and we see the proponderance data saying that trucking volumes did improve this month, but remains in contraction year-over-year. The entire transport industry (truck, rail and ship) remains in contraction. The trend lines in trucking are not clear - one month it looks like the situation is improving, and the next month indicates the opposite.

This situation is mirroring the trends in wholesale trade and manufacturing - which all remain in contraction. Prior to the New Normal, this would have indicated a recession - in 2016 it seems only to be indicating very weak near term economic conditions.

ATA Trucking

The American Trucking Associations' (ATA) trucking index increased 5.9 % in August, following a 2.1 % decline in July.

From ATA Chief Economist Bob Costello:

Volatility continues to reign in 2016. This month's tonnage reading highlights this fact and underscores the difficulty in determining any real or clear trend in truck tonnage. What is clear to me is that normal seasonal patterns are not holding in 2016.

Despite a difficult to read August, I expect the truck freight environment to be softer than normal as well as continued choppiness until the inventory correction is complete. With moderate economic growth forecasted, truck freight will improve as progress is made with the inventory overhang.

Truck tonnage this month

z truck.jpg

Compared with one year ago, seasonally adjusted tonnage increased 3.5 %.

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 July received a bounce to a reading of 5.99, reflecting improved market prospects due to moderate economic growth and a regulatory agenda that will tighten capacity utilization. Building regulatory drag over the next eighteen months should increase pricing and margins for fleets that have capacity. TCI readings for the balance of this year and into early 2017 should remain near the current level.

Jonathan Starks, Chief Operating Officer at FTR, commented that, "The freight market is doing slightly better than just treading water, but there is still a disconnect between activity in the spot and contract markets. This is a result of the slow growth environment that we are in right now. You use your contract carriers whenever you can. There just hasn't been enough extra freight to spill over into the spot markets. Plus, shippers were able to use the big drops in spot rates to help put pressure on on their contract carriers. I believe that those conditions will soon be turning, especially for van freight. Van loads on the load boards are up this summer, and capacity has noticeably tightened. It isn't extremely tight, but compared to last year it is a welcome relief for carriers. That should soon take root in contract rates, especially as shippers and carriers prepare for their 2017 negotiations. One note of caution is in the flatbed segment. The big reductions in oilfield activity has continued to put too much carrier capacity back into the spot market, and pricing is still weak for this segment. Until oil prices move higher or housing and business investment rally, the long-haul flatbed market is going to continue to struggle for volumes and rates."

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

CASS FREIGHT INDEX REPORT

August's Cass Freight Index continued to signal 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 e-commerce, 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 volumes in August on a YoY (year-over-year) basis, marking the eighteenth straight month of year-over-year decline. That said, at least on a seasonally adjusted basis, August volume was up sequentially, offering a glimmer of hope that the contraction in volumes may be getting closer to an end.

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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