A tale of two industries
It was the best of times. It was, well, not too bad times, all in all. That’s probably the best way to look at the trucking industry these days.
In May, the American Trucking Associations’ for-hire truck tonnage index hit an all-time high, exceeding the previous high in December 2011. And yet, the findings and comments from the May 2013 Randall-Reilly MarketPulse survey of for-hire trucking executives suggest May was a good month but not necessarily a great one.
“Freight has improved a little, but not the Q2 surge that we saw the last few years,” said one executive in the survey. “The freight market just continues to take two steps forward, one step back,” said another. And even when things are going well, many trucking executives seem to think it’s just a blip. “Our business has spiked upward, but we are still cautious and will remain so,” said one.
These are not comments you would expect to read during the month when carriers hauled more tons than any other month ever. What gives?
It’s important to recognize that ATA’s index measures freight tonnage. But cargo weight is just one way to look at volume; another is loads. ATA Chief Economist Bob Costello points out the growth in tonnage continues to outpace that in loads.
We have already discussed a couple of times this year the idea that larger trucking companies are faring better than smaller ones. But that’s not the only notable split.
As we noted briefly last month, Costello, speaking in May at the Commercial Carrier Journal Spring Symposium in Birmingham, Ala., pointed out that loads were up year over year in the first quarter of 2013 for all segments except dry van, which was down 3.5 percent. We focused last month on how that 3.5 percent drop breaks down between large and small carriers. This month, let’s look at the dry van segment as a whole relative to other segments, such as flatbed, tank and dump.
What’s happening, Costello says, is that much of the tonnage growth is coming from two freight categories: Housing construction materials (lumber, brick, concrete, shingles, tile, etc.) and necessities for hydraulic fracturing, or fracking (mainly sand and water). That’s all heavy stuff. If, however, there were a sudden surge in the demand for bubble wrap or potato chips, it wouldn’t affect tonnage that much.