U.S. freight numbers down in October

The closely watched American Trucking Associations’ tonnage index fell 3.8% in October, with Hurricane Sandy blamed for some of the negative direction.

Also, Cass Information Systems reported a decline in October freight shipments, with the threat of an October strike by the International Longshoremen’s Association blamed for a “rescheduling of freight deliveries” among major ports.

With freight demand considered a leading economic indicator, the ATA and Cass report support the continued theme of a national economy struggling to maintain momentum.

The ATA Truck Tonnage Index decline in October followed a September that was revised from a 0.1% gain down to a 0.4% decline. Compared with October 2011, the index was off 2.1%, the first year-over-year decrease since November 2009.

Year-to-date, compared with the same period last year, tonnage was up 2.9%.

“Clearly Hurricane Sandy negatively impacted October’s tonnage reading,” ATA Chief Economist Bob Costello said in a statement. “However, it is impossible for us to determine the exact impact.”

Costello said a large drop in fuel shipments into the affected area likely put downward pressure on October’s tonnage level since fuel is heavy freight, in addition to reductions in other freight.

FACTORY OUTPUT DECLINE
“I’d expect some positive impact on truck tonnage as the rebuilding starts in the areas impacted by Sandy, although that boost may only be modest in November and December,” Costello said. “Excluding the Hurricane impacts, I still think truck tonnage is decelerating along with factory output and consumer spending on tangible-goods.”

Following is the track of Index changes during the first 10 months of 2012.
October: down 3.8%
September: down 0.4%
August: down 0.9%
July: up 0.4%
June: up 1.1%
May:  down 0.7%
April: down 1.1%
March: up 0.6%
February: up 0.5%
January: down 4.6%

According to the ATA, trucking serves as a barometer of the U.S. economy, representing almost 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 more than 80%, of total revenue earned by all transport modes.

2013 TRUCKING SCENARIOS
St. Louis-based Cass Information Systems recently reported through its Cass Freight Index that North American freight volumes were down 1.4% in October. The index is up 1.2% for the first 10 months of 2012 compared to the same period in 2011.

“Hurricane Sandy will affect the numbers for the East Coast for the rest of the year – with the Port of New York and New Jersey suffering substantial damage, freight is being re‐routed to other East Coast ports,” noted the Cass report. “Railroads are just restarting their routes into the New York area. After this sharp and sudden drop, freight volumes will rise quickly in the region as emergency supplies and construction materials are moved in to support reconstruction efforts.”

The Cass report also suggested that the “normal holiday surge” of freight may not happen because of “the weak economy and high inventories.”

Cass authors did note some likely realities for the trucking industry in 2013.
• Trucking capacity is tight and getting tighter as trucking fleet expansions are not happening;
• The truck driver shortage is expected to grow;
• It will take some time for the infrastructure in the Northeast to return to 100%;
• Intermodal volumes will continue to grow as more mid‐size companies embrace the option and as rail handles the traffic trucks can’t handle; and,
• Shipping rates will continue to rise.

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.