A national trucking economist believes the worst might be in the rear-view mirror of the trucking industry.
The American Trucking Associations’ advance seasonally adjusted For-Hire Truck Tonnage Index was up 3.2% in May, the first increase since February. Fort Smith-based ABF Freight System saw its first-quarter tonnage drop 15.7% compared to the first quarter of 2008. Its second-quarter tonnage through mid-May is down 17%, according to company spokesman David Humphrey.
Trucking, according to ATA, serves as a barometer of the U.S. economy, representing nearly 69% of tonnage carried by all modes of domestic freight transportation, including manufactured and retail goods. Trucks hauled 10.2 billion tons of freight in 2008.
However, May’s increase wasn’t large enough to offset the March through April cumulative reduction of 6.7%, noted the ATA statement. Compared with May 2008, tonnage contracted 11%, which was the best year-over-year result in three months. Despite the improvement from April’s 13.2% plunge, May’s decrease is still historically large.
“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,” ATA Chief Economist Bob Costello said in the statement. “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.”
Costello also noted that he doesn’t expect tonnage to deteriorate much further and that any growth in tonnage over the next few months is likely to be modest.
ATA Chief Economist Bob Costello said the month-to-month improvement was encouraging, but cautioned that tonnage is unlikely to surge anytime soon.
Donald Broughton, a trucking sector analyst with Avondale Partners, was cited in a recent Associated Press report as saying more than 3,000 trucking companies went out of business in 2008, which removed about seven of 100 trucks off the roads. He said about 480 trucking companies went out of business during the first quarter of 2009, which is less than 1% of the industry’s freight-hauling capacity and leaves too much capacity competing for the lackluster demand.