Tonnage increases in December, but concerns linger
By: Phil Sneed
The seasonally adjusted For-Hire Truck Tonnage Index increased 1 percent during the month of December, according to the American Trucking Associations. The increase comes after the industry experienced a decrease of 0.9 percent in November. Compared to December 2014, the Index increased by 1.1 percent.
The Index equaled 135.6 at the end of 2015, which was higher than the 134.3 posted during November. The current all time high for the Index was 135.8 in Jan. 2015.
Looking back on the year, the ATA stated truck tonnage increased by 2.6 percent. While sounding promising, ATA chief economist Bob Costello remained cautious.
"The For-Hire Truck Tonnage Index increased 1 percent December."
"Tonnage ended 2015 on a strong note, but it was not strong for the year as a whole," said Costello in a press release. "With year-over-year gains averaging just 1.2% over the last four months, there was a clear deceleration in truck tonnage."
According Costello, a high level of inventory exists throughout the supply chain, with total business inventory-to-sales record at its highest level in just over a decade. The inventory cycle, as a result, will have a negative impact on consumers and housing. Additionally, Costello stated there will be a negative impact on freight volumes for the foreseeable future.
These high inventory levels typically result in the decline of transportation volumes. Higher inventory may have resulted from lower consumer spending during the holiday season, according to Logistics Management.
For instance, shoppers were expected to spend more, likely as a result from the money they were saving on gas. This prediction didn't come to fruition, as consumers preferred to pay off existing debts instead of spending money on gifts.
Moving forward, industry analysts, such as BB&T Capital market analyst Thom Albrecht, expect weak spot market and muted freight demand.