U.S. freight reports suggest reduced volume in 2013

Two closely watched freight reports are not optimistic about the future health of freight activity in the U.S., with one report suggesting the trucking industry is facing a a potential “perfect storm” of problems.

The American Trucking Associations’ tonnage index rose 3.7% in November after falling 3.7% in October. Compared with November 2011, the index was up 1%, after contracting 2.1% on a year-over-year basis in October. Year-to-date, compared with the same period last year, tonnage was up 2.8%.

ATA Chief Economist Bob Costello said the November gain happened even with lingering effects of Hurricane Sandy.

“Sandy impacted both October’s and November’s tonnage readings,” Costello said in the statement. “But it was still good to see tonnage snap back in November.”

Costello predicts a rise in flatbed tonnage from the rebuilding in the areas impacted by Sandy. The increase is likely to be seen in spring 2013 when insurance funds begin to be received and the weather improves.

There was also a political aspect to Costello’s note.

“Outside of Sandy, if the fiscal cliff isn’t fixed in time, expect a slowdown in tonnage early next year as paychecks shrink for all households,” Costello said. “Since trucks account for the vast majority of deliveries in the retail supply, any reduction in consumer spending will hurt.”

Even with a budget deal, Costello expects expects slower tonnage growth in 2013 than 2012 as better housing starts and auto sales will be offset by slower factory output and consumer spending.

Following is the track of Index changes during the first 11 months of 2012.
November: up 3.7%
October: down 3.7%
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.

Cass reported that North American shipment volumes were down 4% in November compared to October, with shipping expenditures down 5.8%. However, volumes were up 3.5% compared to November 2011.

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 Cass report included the following notes on the U.S. transportation industry.
• “The transportation sector continues to move ahead without gaining a lot of steam. Volumes are not growing fast enough to really put pressure on the system, but with the trucking industry at virtually full employment, even a small incremental jump in growth would generate a crisis for the trucking industry.”

• “Given the declines in the (trucking) sector’s capacity, the difficulty recruiting and retaining drivers, the availability of credit, the high cost of new equipment, and the productivity impacts of pending federal regulations, the trucking industry is facing a perfect storm.”

• “Since virtually every good that moves in the economy rides on a truck at some point, the inability to find a truck will harm our nation’s ability to move goods efficiently and on time. At that point prices will begin to rise dramatically as well.”