Written by Steven Hansen
Headline data for the American Trucking Association (ATA) shows truck shipments and the CASS Freight Index show that truck volumes improved but significantly differ on year-over-year growth.
Analyst Opinion of Truck Transport
The CASS index is inclusive of rail, truck, and air shipments. The ATA truck index is inclusive of only trucking industry member movements (ATA’s tonnage data is dominated by contract freight). Even so, CASS breaks out trucking and claims it is down 6.6 % year-over-year and up 0.2 % month-over-month Vs. up 4.3 % year-over-year and up 1.2 % month-over-month for the ATA.
I put a heavier weight on the CASS index year-over-year which is consistent with rail and ocean freight. It is not logical that truck freight goes up when industrial production and ocean freight decline – not to mention the continuing effects of the trade war and the coronavirus shutdown.
Econintersect tries to validate truck data across data sources. It appears this month that the truck employment rate of growth continues to slow. Please note using BLS employment data in real-time is risky, as their data is normally backward adjusted (sometimes significantly). Additionally, Econintersect believes that the BLS is not capturing all truck employment.
ATA Trucking
ATA’s March truck tonnage rose 1.2 % and is up 4.3 % year-over-year.
Said ATA Chief Economist Bob Costello:
March was the storm before the calm, especially for carriers hauling consumer staples, which experienced strong freight levels. But there was a huge divergence among freight types. While freight to grocery stores and big box retailers was strong in March, especially late March, due to surge buying by households, freight was anemic in other supply chains, like that for gasoline, restaurants, and auto factories.
Because of this, and the continued shuttering of many parts of the economy, I would expect April tonnage to be very soft.
ATA Truck tonnage this month
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source: ATA
CASS FREIGHT INDEX REPORT
The following was reported by CASS:
Shipment volumes dropped 7.5% vs February 2019 levels (Chart 1), but the index improved sequentially from a low point. January may have been the bottom, but the coronavirus concerns leave open the possibility for a “double dip” or at least a delay in improvements. Of concern, the Port of Los Angeles just reported a 23% y/y drop in imports for February.
z truck2.png
The Cass Freight Index showed a weak U.S. freight market to end 2019 and to start 2020, and just as we were seeing signs of coming off the bottom, we get the coronavirus and all related smacks to an economy that was already struggling to gain traction. In March, the y/y change in both shipments and expenditures fell back from February’s improvement to roughly January levels. So, as we’ve been writing this year, the market initially brushed off coronavirus (SARS-CoV-2/COVID-19) concerns in February, thinking it was just “a China thing.” Last month it got a strong dose of reality that unwound earlier gains and drove fast and severe selling of stocks. In April-to-date (4/13/20), investors appear more optimistic about a flattening of the curve and a re-opening of business (and society) sooner rather than later.We expect future market volatility to continue in the coming weeks, as we believe front line issues will get worse and draw headlines before any good news really comes to the millions of people impacted by the current crisis.
And this ends any chance of 2Q20 seeing y/y growth in domestic U.S. shipments and freight costs. This has quickly gone from a China production concern to a U.S. (and global) consumer spending problem. No business, no jobs, and no income for many leads to much less freight moving around.
Shipment volumes dropped 9.2% vs March 2019 levels, but the index improved sequentially for the second straight month off the January bottom. April will undoubtedly be worse and likely the worst month in a long time. There has been a clear divide between winners and losers of these shut-in orders with demand for groceries, home improvement, e-commerce, and consumer staples increasing, while restaurant, auto, and (mall) retail falling to practically zero volume.
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Source: http://www.cassinfo.com/Transportation-Expense-Management/Supply-Chain-Analysis/Cass-Freight-Index.aspx
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