September was a relatively flat month for the national freight and shipping industries, but first half 2014 gains continued in the third quarter and market watchers believe shipping activity will hold up well in the fourth quarter compared to previous years.
The American Trucking Associations’ Truck Tonnage Index was unchanged in September after a 1.6% increase in August. Year-to-date, tonnage is up 3.2% compared to the same period in 2013.
The not-seasonally adjusted index, which represents the real change in tonnage hauled by the fleets, was up 1.7% compared to August.
“September data was a mixed bag, with retail sales falling while factory output increased nicely,” ATA Chief Economist Bob Costello noted in his monthly report. “As a result, I’m not too the surprised that truck tonnage split both of those readings and remained unchanged.”
According to the ATA, trucking serves as a barometer of the U.S. economy, representing 69.1% of tonnage carried by all modes of domestic freight transportation, including manufactured and retail goods. Trucks hauled 9.7 billion tons of freight in 2013. Motor carriers collected $681.7 billion, or 81.2% of total revenue earned by all transport modes.
Costello said overall third quarter industry conditions were positive.
“During the third quarter, truck tonnage jumped 2.4% from the second quarter and surged 4% from the same period last year,” Costello said.
In investor notes on publicly held trucking companies, Brad Delco, a transportation industry analyst for Little Rock-based Stephens Inc., said “overall industry trends remain strong.” He said the trends and commentary from trucking execs suggest a “strong outlook” for the fourth quarter.
The Cass Freight Index reported that shipments were down 1.4% in September, but freight expenditures were up 0.8%.
“The number of shipments fell 1.4 percent in September compared to August levels, but on a year‐over‐year basis the number of shipments in September was only 0.7 percent higher than a year ago,” according to Rosalyn Wilson, a supply chain expert and senior business analyst with Vienna, Va.-based Delcan Corp., who provides economic analysis for the Cass Freight Index.
Wilson said freight figures have shown that shipment weights are rising, which means a decrease in shipments “does not necessarily indicate a drop in freight activity.”
Cass uses data from $22 billion in annual freight transactions to create the Index. The data comes from a Cass client base of 350 large shippers.
Like Costello and Delco, Wilson also expects a better fourth quarter compared to previous years.
“Manufacturing slowed in August but inched back up in September, indicating that there should not be a dramatic fall‐off in freight as we have experienced in the final months of the last few years. New export orders reached a 4.5 year high in China, supporting predictions of strong U.S. import activity to end the year,” Wilson said.
Wilson’s analysis also included the following points.
• The freight industry continues to experience the strongest year since the recession ended, and while there are still headwinds, things should continue to improve for the industry.
• The rise in costs, especially related to labor, are pressing hard on rates and should break through in early 2015.
• The volume growth that has supported the strengthening in freight is still fragile and susceptible to outside forces.
• Consumers, the missing key for recovery, are getting back in to the game. Consumer confidence and, more importantly, consumer spending have been on the rise along with household income. A good holiday season would be a big boost for the end of the year.