The Big Picture

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.

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 . . .

trucking

Sources:

ATA Truck Tonnage Index Fell 1.8 percent in October
Tiffany Wlazlowski
American Trucking Associations, Monday, Nov. 27, 2006
http://www.truckline.com/NR/exeres/
8D9436E1-98EF-4707-A76F-BA66BDB02F5B.htm

Truckin’, Like the Doo-Dah Man
David Gaffen
WSJ MarketBeat, November 28, 2006, 11:28 am
http://blogs.wsj.com/marketbeat/2006/11/28/truckin-like-the-doo-dah-man/

Comments

How does the ATA calculate their tonnage index? It surveys its membership on actual shipping tonnage, releases a preliminary figure (subject to change), A final report is then issued around the tenth day of the month, including month-to-month, and year-over-year results. Historical data goes back to the 1970s.