Man, we have been on a mad Trade Association jag the past few days.
The latest (via the WSJ’s Market Beat) is the American Trucking Associations’ for-hire Truck Tonnage Index. Most of the goods moved across the country are hauled by Trucks: 10.7 billion tons of freight
in 2005 (about ~70% by tonnage), with Motor carriers collecting $623 billion dollars — 84.3% — of all transport revenues. To say Trucking is important may be a bit of an understatement.
Here’s an excerpt from their release:
"The American Trucking Associations’ advanced seasonally adjusted
for-hire Truck Tonnage Index dropped 1.8 percent in October after
increasing 1.6 percent in September.
On a seasonally adjusted
basis, the tonnage index fell to 110.8 (2000=100) from 112.9 in
September. The latest reduction put the index at its lowest level since
the end of the 2006 first quarter. The index decreased 4.0 percent
compared with a year earlier, marking the largest year-over-year
decrease since February 2001. Year-to-date, the truck tonnage index was
down 2.1 percent, compared with the same period in 2005. The not
seasonally adjusted index increased 4.7 percent from September to
I do not follow this stat on a regular basis. For some context, let’s go to a 3rd party for some context as to what the freight slowdown in October may mean:
"The news prompted David
Rosenberg, chief North American economist at Merrill Lynch, to note
that it “is extremely rare to have truck tonnage go down in October
ahead of the holiday shopping season — declines of the likes we saw
last month took place in 1981, 1982, 2001 and 2002, and these proved to
be disappointing sales periods.”
“Truck tonnage for October just came out and looked borderline recessionary, for lack of a more polite term. It was down 4% y/y in
the largest decline since February 2001 (-1.8% m/m, and down now in two
of the past three months) – and now down for 10 months in a row y/y
(!). You have to – again – go back to the March/00 to Feb/01 period to
find the last time year-on-year comparables were in the red for such a
long stretch of time (and guess what happened in March/01?).”
How much of a leading indicator of future economic activity are trucking volumes? Have a look at the chart above. The slow down in the beginning of the year was very likely related to the decline in Housing and Construction. It fairly accurately foretold the dramatic decrease in Home Building. And, it makes sense that when we see weak October shipping volumes — during the pre-holiday inventory build up — it may bode poorly for the Christmas shopping season.
The overall trend in this indicator is not particularly encouraging for near term economic growth . . .
ATA Truck Tonnage Index Fell 1.8 percent in October
American Trucking Associations, Monday, Nov. 27, 2006
Truckin’, Like the Doo-Dah Man
WSJ MarketBeat, November 28, 2006, 11:28 am