Two closely watched barometers of national economic conditions present different pictures of economic activity. It’s yet another page in the ongoing story of economic uncertainty.
The American Trucking Associations’ Truck Tonnage Index (seasonally adjusted) for January was up 2.9%, following a revised 2.4% increase in December.
January’s index was the highest on record, according to the ATA. Compared with January 2012, the index was up 6.5%, the best year-over-year result since December 2011.
“The trucking industry started 2013 with a bang, reflected in the best January tonnage report in five years,” ATA Chief Economist Bob Costello said in a statement. “While I believe that the overall economy will be sluggish in the first quarter, trucking likely benefited in January from an inventory destocking that transpired late last year, thus boosting volumes more than normal early this year as businesses replenish those lean inventories.”
Also, the ATA revised the seasonally adjusted index back five years as part of its annual revision. For all of 2012, tonnage was up 2.3%, the same as reported prior to the revision. In 2011, the index was up 5.8%.
Weather-induced shipping delays – especially with Hurricane Sandy – during the fourth quarter of 2012 was likely not a factor in the January increase, said Sean McNally, a spokesman with the ATA. He said most of the reported increase was from inventory restocking.
The not seasonally adjusted index, which represents the change in tonnage actually hauled by the fleets before any seasonal adjustment, equaled 122.4 in January, which was 10.7% above the previous month (110.5).
Trucking serves as a barometer of the U.S. economy, representing 70% of tonnage carried by all modes of domestic freight transportation, including manufactured and retail goods. Trucks hauled 9.2 billion tons of freight in 2011. Motor carriers collected $603.9 billion, or 80.9% of total revenue earned by all transport modes.
Fort Smith-based ABF Freight System reported during their Jan. 30 earnings conference call that tonnage-per-day for the first 27 days of January was up between 5% and 6% compared to 2012. However, those comparisons are from a slow 2012.
“We were comparing back to a period when ABF’s January 2012 was down nearly 8% versus January 2011,” explained David Humphrey, Arkansas Best vice president of investor relations and corporate communications.
The Cass Freight Index had a different take on January freight shipments. The index, which measures more than just goods shipped by truck, reported that shipping volumes fell 4.8% in January compared to December and were 2.5% lower than January 2012. The January decline was unusual.
“For each of the last two years, freight shipment volumes ended the year at about the same place they began. This was the first year since the recession period that January shipments were actually lower than January of the previous year,” Cass noted in the report.
January rail activity began strong, but fell later in the month to end at 2% lower than December. Cass reported that “truck shipments were sluggish in January,” but intermodal operations were up 3.5% in January compared to December 2012.
The Cass report suggests that inventory levels could be a future economic drag.
“Inventory levels – which have climbed higher than pre‐recession levels – accompanied by lagging sales, pushed up the inventory to sales ratio in the second half of 2012. In January, the inventory to sales ratio was unchanged from December at 1.28. This level indicates that the inventory buildup may be cause for some concern and is impacting future orders for goods,” noted the Cass report.
The overall sentiment from Cass is one of continued slow global economic growth.
“Resurgence in the freight industry is contingent on performance improvements in many sectors globally, and nothing seems poised for exponential growth. Continue to expect modest growth in freight volumes and higher shipping costs as the year progresses.”