Written by Steven Hansen
Headline data for the American Trucking Association (ATA) and the CASS Freight Index show that truck volumes 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 less 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 decreased 5.1% in July after surging 8.9% in June. In July, the index equaled 109.6 (2015=100) compared with 115.5 in June.
Said ATA Chief Economist Bob Costello:
After a very strong June, for-hire contract freight tonnage, which dominates ATA’s index, slipped in July for a couple of reasons. It is likely that tonnage was down because many fleets didn’t have the capacity to take advantage of stronger retail freight volumes. Therefore, much of that overflow freight moved to the spot market, which did increase in July. Other ATA data shows that for-hire truckload fleets are operating 3% fewer trucks this summer than a year earlier, so it can be difficult to take on a significant amount of additional freight. Also, while retail volumes have snapped back strongly, manufacturing output and international trade freight is lagging well behind.
ATA Truck tonnage this month
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source: ATA
CASS FREIGHT INDEX REPORT
The following was reported by CASS:
“Not as good as it’s gonna get, but better than it used to be …“
The Cass Freight Index showed that sequential volume improvement continued in June but still remains well below year-ago levels and also below where we were in the first quarter of the year. According to carriers on second quarter earnings calls, July was better than expected in the trucking market, both from a rate and demand standpoint. Rail traffic has also continued to march higher off the bottom at a faster pace than the Cass Freight Index (rail is only a small part of this index). Everything in the freight world, although mostly still below year-ago volume levels, seems at least to be moving in the same direction – up.
As a measure of economic activity, Cass Freight Index Shipment volumes dropped 13.1% vs year-ago levels (Chart 1), better than last month’s -17.8% y/y change, but still well below where one wants to see it. The raw index reading nudged up 4.8% from June, an acceleration from the 3.5% sequential improvement seen from May to June. And while the shipment index is now 10.3% higher than the April lows, it remains 6.3% below March levels. Given other freight volume indicators (some discussed below), we’d expect the trend to be higher through year-end.
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Source: http://www.cassinfo.com/Transportation-Expense-Management/Supply-Chain-Analysis/Cass-Freight-Index.aspx
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