Shipping industry reports show slower economic start in 2015
by June 24, 2015 1:07 pm 147 views
May and April reports on the closely watched U.S. shipping industry suggest that the national economy may be struggling to maintain the pace that began in 2014.
The Cass Freight Index shows that May shipments were down 1.3% compared to May 2014, and shipment expenditures were down 4.2%. However, the May shipments were up 2.3% compared to April and are at the highest level year-to-date.
“May shipment volume and payments have reached high points for 2015. Both indexes have been rising for the last four months after a dismal January due to bad weather and delays at West Coast ports,” Rosalyn Wilson, a supply chain expert and senior business analyst with Pasadena, Calif.-based Parsons, who provides economic analysis for the Cass Freight Index, said in the report.
Cass uses data from $26 billion in annual freight transactions to create the Index. The data comes from a Cass client base of 350 large shippers.
Wilson also said the 2015 numbers are being compared against a healthy 2014 shipping cycle.
“2014 was the best year for freight since the Great Recession, with the first six months of 2014 especially strong, which tends to dilute the performance of freight shipments for the first five months of 2015,” Wilson wrote.
She said GDP growth has been slower in 2015, but that freight activity is doing well. She said it may take the U.S. economy more time “to ratchet back up from the dismal start” of early 2015.
The American Trucking Associations’ Truck Tonnage Index was up 1.1% in May and followed a revised decline of 1.4% in April. Year-to-date, tonnage was up 3.7%. The not seasonally adjusted index, which represents the change in tonnage actually hauled by the fleets before any seasonal adjustment, was 0.3% better than April. And the non-adjusted truck tonnage is down 2.7% from January.
“The good news is that truck tonnage increased in May,” ATA Chief Economist Bob Costello noted in his report. “But tonnage is certainly not strong at the moment as factory output is soft and there is an inventory reduction occurring throughout the supply chain. I believe the inventory correction should end this summer and truck freight, helped by better personal consumption, will accelerate, which is good because I think it is unlikely factory output will boost truck tonnage much until later this year or next year.”
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.
Employment in one larger sectors tied to the national shipping industry is doing well. The federal Bureau of Labor Statistics estimated that jobs in the transportation and warehousing sector totaled 4.76 million in May, up from 4.747 million in April and better than the 4.614 million in May. Employment in the sector is up more than 14% compared to May 2010.