A national trucking association report indicates the year ended on a positive note for the industry, but a broader index of the U.S. freight industry continues to indicate a weak national economy.
In fact, the Cass Freight Index suggests that a combination of high retail inventories and an average household tax increase — increases resulting from ‘fiscal cliff’ legislation – of around $700 will result in reduced consumer spending. Without an increase in consumer spending, there will not be a notable increase in new product orders.
“While the consumer sector has been the driving force behind every recovery since the Great Depression, it has not taken the lead this time around. Strong economic growth is still the elusive prize over the hill,” noted the December report of the Cass Freight Index.
Index economists predict that 2013 national economic conditions may not improve much compared to 2012.
“GDP for 2013 is expected to be a sluggish two percent. Unemployment is unlikely to see appreciable change because the economic growth rate will not be sufficient to bring it down,” noted the report.
The Cass Index reported that December 2012 shipments were 1.4% ahead of December 2011, and 2.1% better than December 2010.
“Shipments of building materials into the Northeast for recovery efforts from Superstorm Sandy were expected to bolster shipment volume, but were not enough to offset the slowdown in retail shipments,” the report explained.
Cass uses data from $20 billion in annual freight transactions processed by its information processing division to create the Index. The company processes transactions for about 350 large shippers who represent a broad sampling of industries including consumer packaged goods, food, automotive, chemical, original equipment manufacturers (OEM), retail and heavy equipment.
The American Trucking Associations’ Truck Tonnage Index rose 2.8% in December after rising 3.9% in November. The back-to-back increases in November and December marked the strongest period of 2012, according to ATA.
For all of 2012, tonnage was up 2.3%. In 2011, the index increased 5.8%.
However, the December index not adjusted for seasonality – reflecting actual tonnage hauled by the fleets – was 4.9% below the previous month.
“December was better than anticipated in light of the very difficult year-over-year comparison,” ATA Chief Economist Bob Costello said in the statement.
Like the Cass authors, Costello is also pessimistic about 2013 economic conditions.