Tonnage Slightly Up
Posted on Aug 01, 2008 - 5:55am by Wayne Weisser in Economy, Trucking
ATA is reporting a slight increase in freigth tonnage two months in a row following three straight months of decline. It appears to be temporary and the experts are predicting decliines in the coming months. So any upturn appears to be only temporary.
Trucking news: ATA says seasonally-adjusted for-hire Truck Tonnage Index is up for second straight month
Jeff Berman, Group News Editor — Logistics Management, 7/31/2008ARLINGTON, Va.—After three months of declining growth, the American Trucking Associations reported this week that its advanced seasonally-adjusted for-hire Truck Tonnage Index was up for the second consecutive month, with a 1.3 percent increase in June. This rise follows a 0.5 percent gain in May.
ATA Vice President and Chief Economist Bob Costello said in a statement that despite tonnage being up again in June, it is a “close call” as to whether the economy will enter into a recession later this year or significantly slow down. He added that truck tonnage levels may possibly slow down later this year, with the overall economy expected to be weak in the fourth quarter of this year and the first quarter of 2009.
Capacity is the key to those of us that are left. If there are too many trucks going after too little freight, rates drop as truckers take anything to survive.
Other factors having an impact on current industry conditions, according to Costello, include industry capacity continuing to tighten with carriers leaving the marketplace, due to high fuel prices, as well as reduced fuel prices.
Another reason he cited in regards to capacity was how some carriers are taking trucks out of the U.S. market and selling them to foreign buyers in Eastern Europe and Central and South America.
“As capacity has exited the market at unprecedented rate and businesses get their footing, we are encouraged that the market is headed back toward a healthier equilibrium,” said Con-way Inc. Vice President of Communications and Chief Marketing Officer Tom Nightingale.
The big question is when?
Fuel Prices Climb as Dollar Drops
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I find it insightful to consider how actions from within the trucking industry impact capacity. For example, the 2006 prebuy of tractors (to avoid new EPA mandated engines) is thought to be a main contributor to the reduced capacity of the last 18 months.
Today, truckers are reducing fleet size to improve revenue per truck performance and reduce depreciation/lease costs which most likely will reduce future capacity when freight levels return.