Truck loadings stronger in July, up 0.7%
Reasonable strength was shown in the truck freight markets during July following a lackluster performance in May and June. July saw a gain of 0.7% from June to 59.556 million loadings. This follows growth of just 0.2% in June and a decline of 1.0% in May. The year-over-year growth improved in July. After being below 3% in May and June, growth improved to 3.8% in July. This is well below the 5%+ growth that was achieved during 2010 and early 2011 but is an improvement from the sub-2% gains seen during the second half of 2011.
Truck volumes dropped throughout 2009, bottoming out in Q4 at 157.7 million loadings. After seeing strong gains during 2010, particularly in Q2, volumes were essentially flat until an uptick in Q4 of 2011, entirely due to a strong December. Since December, loadings have been generally stagnant except for a strong surge that occurred in April, with a moderate gain in July. Volumes have grown for the last three quarters after being essentially flat for the three prior quarts.
After dropping 2.1% in 2007, loadings fell 5.9% in 2008 and plummeted 11.3% in 2009. We rebounded to grow 3.3% in 2010 and 3.0% in 2011. Our full year growth for 2012 remains above 3%, with an expected gain of 3.6% in 2012 – not robust but still above its historical average. Our forecast for 2013 and 2014 also inched up modestly, up 3.7% in 2013 and 4.0% in 2014.
Growth is just strong enough (with more reliance on the industrial sector) to activate the positive freight growth multipliers on GDP. That means a modest slowdown in overall growth would quickly send freight growth negative. FTR is very concerned about such downside pressures. Prudent managers are beginning the process of scenario planning in these uncertain times.
There have been no significant changes to our outlook over the last few months – aside from some typical minor movements of the forecast numbers. The economy is stuck in low gear but stronger manufacturing has been enough to keep truckers moving. The economy is operating in a surprisingly consistent mode, albeit slower than expected.
The FTR loadings data tells us that the underlying economic conditions which generate freight are surprisingly good. This is due to the strength of manufacturing in this recovery. Note, however, that these positive multipliers are precarious when GDP remains around 2% and could turn negative if the economy slips only a little.
Remember that the farther we get away from the last recession, the closer we get to the next one. We don’t attempt toforecast when the market might turn down. We’ll leave that to the political prognosticators. When we start to get real indicators of such a risk we will be quick to notify our customers. Those indicators have been rising, as of late.