Tank loadings weak, outlook lower
April 6, 2012
Tank loadings took a heavy hit from the 2011 economic slowdown, given slower manufacturing activity, inventory reductions and weak fuel demand. Tank freight is getting pulled in different directions and overall is remaining weak. January had a large downward revision, now showing a month-over-month drop of 1.9%. Loadings were virtually unchanged in February at 9.286 million. Year-over-year growth was negative for the second straight month, down 0.2%.
Note that this sector benefits heavily from the boom in oil and gas drilling. The activity is increasingly occurring in areas without pipeline infrastructure, generating strong truck demand. In addition the cheap natural gas has strengthened the chemicals industry.
Tank freight fell hard in the middle of 2008 but had a surprisingly strong uptick to end the year. Volumes then proceeded to drop for the next four quarters, bottoming out at the end of 2009. Growth was solid and steady throughout 2010 and then was essentially flat for most of 2011. Loadings were atypically volatile in Q4 with 2 very weak months offset by a very strong surge in December. The December surge looks to have been a one month phenomenon, with 2012 volumes reverting back to the levels seen at the start of 2011Q4.
Tank loadings fell 9.0% in 2008 and 5.8% in 2009. Volumes were nearly unchanged in 2010, up just 0.7%. 2011 saw better growth with loadings growing 3.0%. Growth will remain relatively weak for this recovery, rising just 0.5% in 2012. After a very weak Q1, volumes should rebound the rest of the year. Growth will then settle into the 2%+ range, rising 2.4% in 2013 and 2.2% in 2014.
The 2011 economic slowdown should reverse in 2012 for industry commodities, although the pressure on fuel prices will weaken gasoline volumes. There is additional fracking volume in this segment that is not getting into the traditional market data, including ours. That puts additional upside to our modest forecast.
U.S. Truck Loadings is the estimated number of truck loads originated in the United States plus truck loads that come to U.S. destinations from Mexico and Canada. It is tons divided by the average tons per truck. FTR’s data is seasonally adjusted and measures both short and long-haul OTR segments.
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