FTR’s Annual Freight Update

Once each year FTR updates its databases with the results of our annual transport research work. To produce the uniquely broad market coverage of our work we need to search very hard to see the 60% of the market invisible to most measures of truck output. To do that we have developed an extensive database of annual statistics on freight commodities: their production, shipments, import, and export volumes. We work our magic to turn that into freight volumes – by each mode (truck, rail, water, and pipeline).

When that work is done we conduct our annual “recalibration” that folds the new data into our historical databases. This month you will see the fruits of this work in changes to our 2010 and 2011 data. The data shows that freight actually recovered more strongly in 2010 than our existing data indicated. We had said that U.S. truckloads had increase by 4.9% in 2010. After folding in the enhanced 2010 data we now know that the true recovery in Class 8 truckloads was 11.2%. That is a big deal!

We revised the data back to 2005, but the changes were small prior to 2010. For 2005 – 2007, totals were revised downward by less than 1%. For 2008 and 2009, data were revised upward by 1.3% in each year. Categories which saw the largest upward revision for 2010 were Farm Products, Crude Oil & Natural Gas, and Coal. Metallic Ores was revised significantly downward.

The upward revision for freight volumes produces four significant market conclusions:

1. We estimate that truck loads have now recovered 76% of the big loss in freight during the recession. This is almost twice the 43% recovery that we previously believed. It means that pressure on fixed industry capacity may be possible late in the upturn. We currently predict the establishing of a new peak in 2015.
2. Active capacity utilization (measuring just those vehicles in service) increases 110 basis points to 96.9% at year’s end.
3. Total capacity utilization (measuring the whole vehicle park) has changed from 77.7% for 2011 to 82.9%, with an 84% year-end value. That moves the industry from a mild surplus to a mild shortage of vehicles. This is consistent with what we are hearing from used truck markets.
4. Based on these changes our estimate of the driver shortage increases by 30,000 drivers to the 170,000 driver range. You can see some of this pressure in the current spot market.

We present these results with two caveats. First, we hope you will be patient with the changeable nature of trucking data. Given the scarcity of good, convenient data we use the best data we have at any given time. That means big changes sometimes. We offset that inconvenience by presenting the changes openly, with clear, timely explanations. Your alternative is to revert to the more stable traditional measures – and lose sight of 60% of the market. Second, the business of spreading the annual data across our quarterly forecast data may produce some distortions in first quarter growth calculations. You will see that in the 6.1% quarter-over-quarter growth reported for 2010Q1. You should interpret that data as an indication of very strong freight growth late in 2009 and early 2010. It is worthy of your attention – but not as a precise number for 2010Q1. We are working to solve this vexing problem and expect a fix in early 2012.

In the meantime you can take comfort that FTR has revealed more of the reasons why this upturn has been surprisingly good for trucking.