Headline data for truck shipments were again mixed in March - but our analysis believes trucking growth rate is modestly improving.
Analyst Opinion of Truck Transport
I tend to put heavier weight on the CASS index which again showed a moderate improvement year-over-year. The ATA data continues to wander all over the map - and is likely a result of seasonal adjustment issues and a smaller share of shipping now going to ATA members.
It is also interesting that the current trucking employment pattern is now showing a short term improvement trend which supports the CASS index.
American Trucking Associations' advanced seasonally adjusted (SA) For-Hire Truck Tonnage Index slipped 1 % in March, following a 0.1% decline during February. Said ATA Chief Economist Bob Costello:
Like several other economic indicators, March truck tonnage was likely hurt by some late season winter storms. Despite last month's dip, seasonally adjusted tonnage rose 1.2% during the first quarter overall from the previous quarter, and increased 0.2% from the same quarter last year.
While I'm not expecting a surge in truck tonnage anytime soon, the signs remain mostly positive for freight, including lower inventory levels, better manufacturing activity, solid housing starts and good consumer spending. As a result, we can expect moderate growth going forward.
Truck tonnage this month
Compared with March 2016, the SA index decreased 2.7% year-over-year.
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.
FTR's Trucking Conditions Index for February Moves Up in Expectation of Tightened Market
FTR's Trucking Conditions Index (TCI) for February took a positive step, moving up about two and half points from January to a reading of 5.11. As detailed in the April issue of the Trucking Update, FTR expects the index to approach a double digit positive reading by year end due to the combination of freight growth and still-planned regulatory headwinds in 2017. FTR is forecasting improvement in freight growth in 2017, closing in on 4% loadings growth for the year. FTR's regulatory forecast for 2017 has moved modestly down, although they still expect significant effect late in the year from the ELD implementation. On the downside, FTR does not expect contract rates to make a strong move for at least six months.
Both the Shipments and Expenditures Indexes have now been positive for three months in a row. Throughout the U.S. economy, there are a growing number of data points suggesting that the economy is getting better. Some data points are simply less bad, but an increasing number of them are better, and even a few are becoming outright strong. The 0.9% YoY increase in the March Cass Shipments Index is yet another data point which suggests that the first positive indication in October may have indeed been a change in trend. In fact, it now looks as if the October Cass Shipments Index, which broke a string of 20 months in negative territory, was one of the first indications that a recovery in freight had begun in earnest.
Although the 0.9% March YoY change looks weaker than the 1.9% February YoY change, we should point out that March 2016 was one of the least negative months for the shipments index and hence serves as a tougher comparison.
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