Truck Tonnage Jumps in February

The American Trucking Association (ATA) reported a big jump in its seasonally adjusted for-hire truck tonnage index for February. Up 7.2% month-to-month, year-to-date tonnage is up 4.8%. The association’s Economist cautioned however that the February jump was likely the result of a weaker than average January, which declined 0.3% from December.

It seems that the trucking market is a mix bag these days. Stifel analysts showcase Old Dominion Freight Line as the LTL market leader thanks to its disciplined pricing and operations approach. The company reported that LTL tons per day increased 2.0% and 3.2% for January and February respectively. Although weight per shipment declined in each month, the gains in tons per day attributed to the 6.4% and 6.1% year-over-year increases in LTL shipments per day for January and February respectively.
First quarter is likely to come in positive for many LTL providers. According to Stifel, most private carriers it surveyed see 1Q16 as better than 1Q15.
Meanwhile, the COO of Swift Transportation, the largest US TL provider commented that the TL market capacity remains high and demand slow to rise. In addition, shippers are resisting rate increases.
Bob Costello, ATA’s Economist commented in the ATA monthly index release, “I’m still concerned about the elevated inventories throughout the supply chain.” Indeed, there is still cause for concern. The January figures inched up with retail inventories increasing 0.2% after a similar rise in December. It is likely that businesses could continue working through the inventory glut through the first half of the year.
As a result of the high inventories, the trucking market will probably continue as is – a mix bag as demand will be spotty, dependent on specific retailer or other business. Once inventory is drawn down, however, demand for trucking could pick up more consistently with manufacturing activity likely rising as well.
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