Trucking index shows possible economic recovery slowdown

May and June reports from the American Trucking Associations’ provide some unfortunate evidence that a national economic recovery is slowing.

The for-hire truck tonnage index in June dipped 1.4%, and the May index decline was revised up from 0.6% to just 0.1%. However, the ATA said May and June marked the first back-to-back contractions since March and April 2009.  The latest reduction lowered the SA index from 110.1 (2000=100) in May to 108.5 in June.

According to the ATA, trucking serves as a barometer of the U.S. economy, representing nearly 68% of tonnage carried in 2008 by all modes of domestic freight transportation, including manufactured and retail goods. Trucks hauled 8.8 billion tons of freight in 2009. Motor carriers collected $544.4 billion, or 81.9% of total revenue earned by all transport modes.

The good news is that total tonnage is up compared to 2009. Compared with June 2009, tonnage climbed 7.6%, which was just below May’s 7.7% increase and the seventh consecutive year-over-year gain. Year-to-date, tonnage is up 6.6% compared with the same period in 2009.

Tonnage gains in the sector are critically important for two area trucking companies that have struggled through a freight recession that began in late 2006.

Fort Smith-based Arkansas Best Corp. recently reported a $7.4 million loss for the second quarter of 2010, an improvement over the $15.4 million loss in the same period of 2009. ABF Freight System, a less-than-truckload carrier and Arkansas Best’s largest subsidiary, saw second-quarter tonnage increase 14% compared to the first quarter.

Van Buren-based USA Truck ended a string of quarterly losses with a $900,000 net income gain in the second quarter, but company officials say tough economic conditions will continue for the near term. The long-haul carrier posted a first quarter loss of $2.99 million. That loss followed a 2009 net income loss of $7.17 million compared to a gain of $3.14 million in 2008. The 2009 loss included a second quarter loss of $1.1 million.

ATA Chief Economist Bob Costello said May and June reports reflect an economy that is slowing. He said truck tonnage growth is likely to moderate in the months ahead as the economy decelerates and year-over-year comparisons become more difficult.

Costello said the trucking sector has removed so many trucks, trailers and other equipment out of the network that even a slight tonnage growth will be helpful.

“Due to supply tightness in the market, any tonnage growth feels significantly better for fleets than one might expect,” Costello explained.

The trucking sector is important to the Arkansas economy. Arkansas and Nebraska are tops in the country in in terms of percentage of total state employment being in the trucking sector, according to the ATA trends. In Arkansas, 3.7% of all people employed in the private sector worked for a trucking company, with 3.6% for Nebraska. California and Texas have the most people working in the trucking industry in terms of total numbers.