Written by Steven Hansen
Headline data for the American Trucking Association (ATA) and the CASS Freight Index show that truck volumes improved but show the year-over-year growth deep in contraction.
Analyst Opinion of Truck Transport
The CASS index is deeply in contraction year-over-year whilst the ATA index is barely in contraction year-over-year.
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).
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 June truck tonnage increased 8.7% in June after falling 1% in May. June’s tonnage is 1.3% below June 2019.
Said ATA Chief Economist Bob Costello:
Not surprisingly, as more states lifted restrictions in June, truck tonnage was robust. While the gain in June was the single best month since January 2013, the solid gain was not enough to put tonnage back to pre-pandemic levels, but it is close. I am hearing good anecdotal freight reports for July, but I am concerned that freight could slow as more states reinstate restrictions due to increasing Coronavirus cases.
ATA Truck tonnage this month
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source: ATA
CASS FREIGHT INDEX REPORT
The following was reported by CASS:
The Cass Freight Index showed sequential volume improvement again in June, although freight volumes still remain well below year-ago levels and also below pre-pandemic levels. We were thinking the June rebound would have been stronger, based on what we’re hearing on the trucking side and what we’ve been seeing with respect to rail traffic and with the ISM Index now back >50. Earnings season for the transports kicks off this week, and we should get more color on why this may have been the case. In our view, U.S. freight volumes (the amount of “stuff” moving around the country) will not return to 2019 levels until 2021 at the earliest. Given the most recent Cass readings, there is still a wide gap to bridge.
As a measure of economic activity, Cass Freight Index shipment volumes dropped 17.8% vs year-ago levels (Charts 1), better than last month’s -23.6% y/y change, but not good by any absolute measure. The index reading from May nudged up 3.5%, an acceleration from the 1.6% sequential improvement seen from April’s low to May. We believe the stock market run over the last few months has, therefore, largely been a function of very low interest rates (higher valuation multiples) and not a function of a better economy (higher earnings).
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Source: http://www.cassinfo.com/Transportation-Expense-Management/Supply-Chain-Analysis/Cass-Freight-Index.aspx
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