What a difference a month makes.
After declines in April, the American Trucking Associations’ truck tonnage index and the Cass Freight Index reported gains in May. The reports from the two organizations provide a look at freight activity, which is considered an important economic bellwether.
The American Trucking Associations’ advanced seasonally adjusted Truck Tonnage Index rose 2.3% in May after falling 0.2% in April. Compared with May 2012, the index was up 6.7%, which is the largest year-over-year gain since December 2011. Year-to-date, compared with the same period in 2012, the tonnage index is up 4.5%.
“After bouncing around in a fairly tight band during the previous three months, tonnage skyrocketed in May,” ATA Chief Economist Bob Costello said in a statement.
“The 6.8% surge in new housing starts during May obviously pushed tonnage up as home construction generates a significant amount of truck tonnage,” Costello explained.
He also said the index increase was a surprise.
“While we heard good reports regarding freight levels during May, I have to admit I am a little surprised at the large gain in tonnage.”
Trucking serves as a barometer of the U.S. economy, representing 67% 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.
The ATA report and the Cass Index provide insight into the type of economic environment faced by several large Arkansas-based transportation companies like Fort Smith-based Arkansas Best Corp. (ABF Freight System), Lowell-based J.B. Hunt Transport Services, Tontitown-based P.A.M. Transportation, and Van Buren-based USA Truck.
The Cass Freight Index for May 2013 reported at 2.9% increase in all shipments – rail, truckload, less-than-truckload, etc. – but a 0.3% drop from the May 2012 activity.
“North American shipment volume rebounded in May, while expenditures remained almost unchanged. This seems an accurate reflection of the mixed results in the freight sector and the economy overall. Unemployment is declining, yet job creation is still weak,” noted Rosalyn Wilson, a supply chain expert and senior business analyst with Vienna, Va.-based Delcan Corp., who provides economic analysis for the Cass Freight Index.
Cass uses data from $22 billion in annual freight transactions processed by its information processing division to create the Index. The data comes from a Cass client base of 350 large shippers.
Wilson said a bulk of the increase in rail shipments is the result of increase shipments of oil.
According to the Association of American Railroads, the use of Class 1 railroad cars for crude oil shipments has grown from 9,500 carloads in 2008 to almost 234,000 carloads in 2012. In the first quarter of 2013, Class 1 railroads pulled 97,135 carloads of crude oil, up 20% from the fourth quarter of 2012 and up 166% compared to the first quarter of 2012.
“With traditional rail commodities such as coal and grain faltering in recent years, petroleum shipments have ensured industry growth,” Wilson wrote.
Signs of future economic activity remain uncertain, with Wilson noting that there “are no clear signals indicating which way the economy will go for the rest of the year.” She said gains in residential construction and signs of an improving global economy are somewhat offset by a potential slowdown in the manufacturing sector.
A June 12 economic report from Wells Fargo agrees with Wilson’s assessment.
“Business investment spending, both for equipment & software as well as structures, should add to growth but at a slower pace in the current quarter. Manufacturers’ capital goods orders and shipments gains have slowed over the past three months and while that is weaker than earlier in this recovery, the gains reflect an economy in the middle of a steady expansion—not a boom, but no signal of recession either.”
The City Wire Staff
Latest posts by The City Wire Staff (see all)
- Startup Junkie Unveils Participants In ‘2.7.0.’ Accelerator - August 31, 2015
- Van Buren Tourism Leader Says Women ‘Should Step Out There’ - August 31, 2015
- Siloam Springs Regional Hospital Joins Statewide Stroke Response Network - August 25, 2015