Freight industry struggling with ‘ups and downs’

A sentence from the Cass Freight Index well summarizes a collection of reports that track economic health through trucking industry activity: “Overall, still positive growth, but many ups and downs.”

St. Louis-based Cass Information Systems recently reported that the number of freight shipments has risen at a very steady pace in 2012, but is still well below the most recent high point in September 2011.

Freight shipments and truck tonnage are considered leading U.S. economic indicators.

Freight shipment volume, according to Cass, is trending upward and is now 2.2% higher between January and May and the same period in 2011. In January, the gap between 2012 shipment volume and 2011 was 3.6%, but it was down 1.3% in March.

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, OEM, retail and heavy equipment.

“The slowdown in manufacturing and backlog will translate to lower volumes to be shipped in the near future. Truck sales have dropped off dramatically and some companies have even laid off workers,” noted the May 2012 report from Cass. “The housing market is very volatile, with strong numbers one month and weak the next. Overall, still positive growth, but many ups and downs.”

The Ceridian-UCLA Pulse of Commerce Index issued by the UCLA Anderson School of Management and Ceridian Corporation rose 0.8% in May. The three-month moving average for the index is 2.2.

The index uses diesel fuel consumption data for over-the-road trucking and “serves as an indicator of the state and possible future direction of the U.S. economy,” according to the index report.

TRUCKING SLOWDOWN
The American Trucking Associations’ seasonally adjusted Truck Tonnage Index fell 0.7% in May after falling 1.1% in April. Compared with May 2011, the index was 4.1% higher, the largest year-over-year increase since February 2012. Year-to-date, compared with the same period last year, tonnage was up 3.8%.

The not seasonally adjusted index, which represents the change in tonnage actually hauled by the fleets before any seasonal adjustment, equaled 124.5 in May, which was 6.5% above the previous month.

“Two straight months of contractions is disappointing,” ATA Chief Economist Bob Costello said in a statement. “The drops in tonnage are reflective of the broader economy, which has slowed.”

The Freight Transportation Services Index (TSI), produced by the U.S. Department of Transportation, reported June 13 that the amount of freight carried in April was 0.2% higher than in March.

The April index was 109.6, above the 107.4 in April 2011, but below the December 2011 index of 114 — an all time high since the index began in 1990.

“The Freight TSI has shown little change since dropping in January from its December peak. The recent plateauing of the freight TSI since January appears to reflect slowing growth in the general economy,” noted the DOT analysis in the April report.

BAD NEWS, GOOD NEWS
Costello said he is concerned that businesses are “sitting on cash” rather than hiring workers or investing in their operations. Problems in Europe and election-year gridlock in Washington D.C. are contributing to business uncertainty, Costello said.

It’s not all bad news.

“The good news is that the decrease in fuel prices will help support retail sales going forward, which is a big part of truck tonnage,” Costello said.

Another issue facing the trucking sector is driver turnover.

Costello’s monthly Trucking Activity Report shows the turnover rate for large truckload fleets rose two percentage points to 90%, its highest point since the first quarter of 2008. At truckload fleets with less than $30 million in revenue turnover shot up 16 percentage points to 71% in the first quarter – its highest level since the second quarter of 2008.

Turnover at less-than-truckload fleets was low — at just 8% — but up one percentage point from the previous quarter.