Truck tonnage slows from 2011 pace

Increases continued for tonnage hauled by the U.S. trucking industry during the first quarter of 2012, but it was slower than the pace seen during 2011.

The American Trucking Associations’ (ATA) Truck Tonnage Index rose 0.2% in March after increasing 0.5% in February, the trade group announced Tuesday (April 24). Compared with March 2011, the index was up 2.7%, which was the smallest year-over-year increase since December 2009.

The not seasonally adjusted index, which represents the change in tonnage actually hauled by the fleets before any seasonal adjustment, equaled 123.2 in March, which was 9.1% above the previous month.

“March tonnage, and the first quarter overall, was reflective of an economy that is growing, but growing moderately,” ATA Chief Economist Bob Costello said. “The pace of freight definitely slowed from the torrid pace in late 2011.”

Costello said the industry should not expect the rate of growth seen over the last couple of years, when tonnage grew 5.8% in both 2010 and 2011.

“Expect tonnage overall this year to be up at a more moderate rate, perhaps less than 3%, which is more in-line with normal growth,” Costello advised.  “Most economic indicators still look good, which will continue to support tonnage going forward.”

According to the ATA, trucking serves as a barometer of the U.S. economy, representing 67.2% of tonnage carried by all modes of domestic freight transportation, including manufactured and retail goods. Trucks hauled 9 billion tons of freight in 2010.  Motor carriers collected $563.4 billion, or 81.2% of total revenue earned by all transport modes.

The Ceridian-UCLA Pulse of Commerce Index, issued April 4 by the UCLA Anderson School of Management and Ceridian Corp., also shows trucking activity moderation during the first quarter.

The Ceridian-UCLA rose 0.3% in March following a 0.7% increase in February and a 1.7% decrease in January. The first quarter PCI is below the fourth quarter of last year by 4.9 percent at an annualized rate, Ceridian noted in its report.

Continued gains in tonnage don’t always translate into better financial numbers.

Van Buren-based USA Truck lost $4.9 million in the first quarter of this year, which equated to a 47-cent per share earning deficit. The recent losses widened from a net income deficit of $2.7 million or 26 cents per share lost in the same quarter of 2011.

First quarter segment revenue for the trucking segment of Lowell-based J.B. Hunt Transport Services totaled $128 million, up 8% compared to the 2011 period. However, operating income was $4.9 million, down 16%.

Overall, the large “multi-modal” operation of J.B. Hunt posted record net income of $67.7 million during the first quarter, up from $50 million during the 2011 quarter. The per share earnings of 57 cents surpassed the consensus estimate of 52 cents.

Fort Smith-based Arkansas Best Corp., the parent company of less-than-truckload operator ABF Freight System, is expected to release first quarter earnings on Friday (April 27).

DRIVER FLUCTUATION
The ATA recently reported that the turnover rate for truck drivers at large truckload fleets dipped one percentage point to an annualized rate of 88%.

Costello, the ATA economist, said the decline was unexpected.

“This reprieve, while surprising, is likely temporary,” Costello said. “As the economy continues to recover, freight volumes should continue to grow, which along with regulatory challenges related to hours-of-service and the government’s CSA fleet oversight program, will continue to cause the driver market to tighten and the turnover rate to rise.”

Costello’s assessment is on targets, says Cliff Beckham, president and CEO of USA Truck.

“I would agree with the report and add that turnover has indeed picked up again in early 2012,” Beckham said.

Turnover among large truckload fleets had risen to 89% in the third quarter of 2011 after bottoming out at 39% in the first quarter of 2010.
 
For all of 2011, the large truckload turnover rate averaged 83% – the highest average since 2007 when churn averaged 117%.
 
At small truckload firms, with less than $30 million in annual revenue, the turnover rate dipped to 55% from 57% in the previous quarter. The fourth quarter turnover rate for less-than-truckload fleets fell to just 7% from 10% in the third quarter.