Thanks to an economy that is still growing but slowly, truck tonnage has taken a hit in the first quarter of the year.

The advanced seasonally adjusted (SA) For-Hire Truck Tonnage Index generated by the American Trucking Assns. climbed 0.2% in March. That’s after rising 0.5% in February. The SA index stood at 119.5 (where 2000=100), up from 119.3 in February. Compared with March 2011, the SA index was up 2.7%, marking the smallest year-over-year increase since December, 2009.

ATA also reported that the not seasonally adjusted index-- which represents the change in tonnage actually hauled by the fleets before any seasonal adjustment--  was123.2 in March, or 9.1% higher than the previous month.

“March tonnage, and the first quarter overall, was reflective of an economy that is growing, but growing moderately,” ATA chief economist Bob Costello remarked. “The pace of freight definitely slowed from the torrid pace in late 2011.

“Most economic indicators still look good, which will continue to support tonnage going forward,” he added.

 Costello stressed that trucking “should not expect the rate of growth seen over the last couple of years,” when tonnage soared 5.8% in both 2010 and 2011.

Rather, he said to “expect tonnage overall this year to be up at a more moderate rate, perhaps less than 3%, which is more in-line with normal growth.”

Analyst Peter Nesvold of Jefferies pointed out in a “takeaway” release that the ATA’s SA figures amount to truck tonnage being up 3.5% year-over year (YoY) in April amounted to “taking a step back from 1Q:12’s 3.9% YoY run rate.”

Nesvold also observed that in April, “ATA's truck tonnage index, which includes data from truckload (TL) and less-than-truckload (LTL) carriers, rose +3.5% YoY, likely reflecting the recent moderation in the overall economy.

“Our channel checks,” he continued, “suggest that volumes have softened in mid-May and are down both sequentially and YoY. One of our contacts shared with us that he is mildly concerned about the softness in May volumes; however, he noted that if the weakness continues into June, he would become extremely concerned.”

According to Nesvold, the current trends in tonnage closely resemble a "typical" truck cycle. “We compared this current tonnage cycle to our truck composite model, which aggregates truck tonnage data over the past 40 years, and we found that this tonnage cycle has been unremarkable in a historical context.

“Based on how devastating the Great Recession was, “he explained, “we expected to see huge swings in truck tonnage relative to the ‘typical’ tonnage cycle. What we found, however, is that this tonnage cycle has been in line with historical trends. Furthermore, the current truck cycle is 96% correlated with our truck composite model.”

Nonetheless, Nesvold expressed concern that “the recent moderation in truck tonnage is a bit concerning. While the unseasonably warm winter makes it unusually difficult to draw firm conclusions on some U.S. data currently, several other variables have softened recently as well.” He said these inlcude railcar backlogs, Class 8 orders, parcel yields, etc.

“Each of these seems to have a reason,” he continued, “but the totality of the data simply seems to suggest a moderating economy... On balance, the data feels directionless.” He added that Jefferies’ channel checks “suggest that the rate environment must firm before fleets resume their trade cycle en masse.”

The April Cass Freight Index,  published by Cass Information Systems, Inc., indicated that the “freight market continued to grow in April at the slow pace we have experienced for most of the recovery, with North American freight volumes rising 1.9% from March to April.”

The April Index shows that “Shipment volume has been rising steadily since January of this year, although not at a very robust pace. April’s 1.9% increase is lower than the increases in March and February-‐2.1 and 2.5%, respectively. While still positive, the rate of growth declined in both March and April. April’s sequential growth is a scant 0.2% higher than April a year ago.”

What’s more, Cass said that when the declining length of haul recorded is factored in, then on a ton-mile basis, “truck freight has actually been flat or even contracting slightly.”

In Cass’s view, this performance reflects an economy that is showing signs of sustainable but low  growth in 2012. “There have been many positive signs in recent weeks, but each has a cautionary note,” said Cass. “The unemployment rate fell to 8.1%, but the number of new jobs created during the period was well below last month’s figures.”

Cass pointed out that the Institute for Supply Management’s manufacturing index rose 1.8% in April. “Digging into the details of the report shows growth of 2.7% in production, a return to positive growth of 3.7% in new orders, but a continued contraction of 3% in order backlog. Exports have been strong all year, but import growth is flat. Consumer confidence improved again in April, concurrent with a rise in consumer spending. A positive note about consumer spending is the increase in purchases of non‐necessity goods. There has, however, been a jump in consumer debt as more consumers are willing to use credit if they feel more confident about the economy.”

The Index also noted that spending on freight transportation grew faster, rising 3.4%. “With the slow growth in the economy overall,” the report stated, “these results are not surprising.”

Cass said that the spending rise “shows continued strength in rates as capacity closely matches demand, especially in the trucking sector. Fuel prices have fallen for the last three weeks, so fuel surcharges were not as big a cost factor in April. “Much of the strength in rates comes from contract rates that were negotiated early last year anticipating a faster economic growth rate and capacity issues, which were expected to cause a spike in rates. So far we have not been able to sustain a strong growth spurt, so rates have increased only modestly.”

To see an ATA video of Costello discussing this month’s tonnage report, click here.