Trucking Outlook for 2011

As the latest freight statistics show the highest freight volume year-over-year increase since January, and rates for both truckload (TL) and less-than-truckload (LTL) rising, the expectation may be that the second half of 2011 will be better than the first, with more tonnage hauled and more truck driving jobs generated. However, there is more than meets the eye when it comes to predicting where the trucking industry is headed in the second half, and the statistics don’t tell the whole story.

The American Trucking Associations (ATA) advance seasonally adjusted For-Hire Truck Tonnage Index showed a jump in tonnage of 6.8% in June when compared with the same period last year, the largest since January. The seasonally adjusted tonnage index for May was 3% up on the previous year. After a revision decreased the seasonally adjusted index by just 2.0% instead of the 2.3% initially reported in May, it rose strongly in June by 2.8% from 112.6 to 115.8.

The actual tonnage hauled before seasonal adjustment was 122.3 in June, an increase of 5.3% over May’s result. Bob Costello, Chief Economist for the ATA, indicated that the index contraction of 2.6% during April and May was more than compensated for by the strong tonnage statistics for June. “Motor carriers told us that freight was strong in June and that played out in the data as well” he said. According to Costello, whether or not truck tonnage will increase in the second half of the year depends greatly on the strength of the manufacturing sector and whether it can increase at a higher rate than GDP.

When it comes to freight rates, Transportation Equity Analyst, Peter Nesvold, indicated that investors expect greater increases in TL rates than the 2-4% they are seeing, but to get the 8% rate increases desired, volumes would have to increase. Nesvold’s prediction is that TL volume increases will lead price increases. LTL on the other hand, has seen stronger recovery and according to Nesvold this will continue.

Nesvold also points out that the second half results for 2011 are hard to predict because cautious retailers across the country, already affected by a slow economic recovery, are reluctant to finalize inventory requirements until the completion of the debt-ceiling negotiations so they can determine how they will be affected by the results. This means that volume increases for the back-to-school and Christmas shipping seasons, besides having a delayed start, could run over a shorter period.

Statistics from FleetOwner.

 

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