Fleetowner 2526 Freshway Foods Sm
Fleetowner 2526 Freshway Foods Sm
Fleetowner 2526 Freshway Foods Sm
Fleetowner 2526 Freshway Foods Sm
Fleetowner 2526 Freshway Foods Sm

Freight up but outlook remains down

June 29, 2009
While for-hire freight tonnage took a healthy positive bounce in May, according to a widely watched industry index, it wasn’t enough to erase cumulative losses for the year – nor, to the minds of many experts, is the bounce an indication that better times for truckers have arrived

While for-hire freight tonnage took a healthy positive bounce in May, according to a widely watched industry index, it wasn’t enough to erase cumulative losses for the year – nor, to the minds of many experts, is the bounce an indication that better times for truckers have arrived.

“I am hopeful that the worst is behind us, but I just don’t see anything on the economic horizon that suggests freight transportation is ready to explode,” noted Bob Costello, chief economist for the American Trucking Associations (ATA). Despite a 3.2% increase in the group’s seasonally adjusted (SA) for-hire truck tonnage index in May, Costello doesn’t think a full-blown freight recovery is imminent.

“The consumer is still facing too many headwinds, including employment losses, tight credit, rising fuel prices, and falling home values, to name a few, that will make it very difficult for household spending to jump in the near term,” he explained.

Though this is the first time the ATA’s index rose since February this year, May’s 3.2% increase wasn’t large enough to offset the March through April cumulative reduction of 6.7%. Costello added that, compared with May 2008, tonnage contracted 11% – a decrease is still historically large.

While he noted that the month-to-month tonnage improvement is encouraging, Costello cautioned that tonnage is unlikely to surge anytime soon. While Costello doesn’t expect tonnage to deteriorate much further, he stressed that any growth over the next few months is likely to be modest.

“We’re on the same page – their numbers are in line with ours, and those indicators are not showing a substantial growth in freight demand over the next several months,” Eric Starks, president of FTR Associates, told Fleet Owner. “We may see some swings in inventory levels over the next few months, but it’ll be erratic and not enough for sustained freight growth.”

Starks said his firm’s data indicate freight tonnage won’t start to grow significantly until the second half of 2010, and that the tonnage increase reported by ATA in May doesn’t change that forecast.

“A series of tonnage increase may tweak that outlook, moving up freight growth into the second or maybe first quarter of 2010, but we don’t think it means we’ll see a return to good freight demand this year,” he explained. “There’s still too much inventory to work through. We’re at the bottom in terms of the [trucking] freight market decline, but we still think we’re going to be at the bottom for several months to come.”

About the Author

Sean Kilcarr | Editor in Chief

Sean reports and comments on trends affecting the many different strata of the trucking industry -- light and medium duty fleets up through over-the-road truckload, less-than-truckload, and private fleet operations Also be sure to visit Sean's blog Trucks at Work where he offers analysis on a variety of different topics inside the trucking industry.

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