Truck loadings rise again in May

Once again, the FTR loadings data shows that growth remains well below the levels normal for a mid-recovery period. This is a reflection of the slow growth in overall economic activity, which is also well below normal levels. After a jump 0f 1.1% in April, month-over-month loadings rose a further 0.2% in May. This is first consecutive monthly gain since the end of 2011 and equates to movement of 58.644 million loadings in May. The year-over-year growth slowed modestly to 2.2%.

Recent History
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 stabilized and maintained most of December’s gain.

Outlook
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 outlook for 2012 is now just below 3%, at 2.8% – not robust but still above its historical average. Once more, our forecast for 2013 and 2014 is slightly reduced, up 3.0% in 2013 and 3.7% in 2014.

Year-over-year growth will stay near its current level until an improvement in the latter portion of the year. Even if there was very little growth in monthly volumes we would still see year-over-year growth of ~2% for the rest of the year.

Remember that the farther we get away from the last recession, the closer we get to the next one. We don’t attempt to forecast 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.

Analysis
The FTR loading index is growing at greater levels than during last year’s disappointing results, but well below levels frequently experienced in upturns. None-the-less, the 3-4% growth levels should be enough to tighten truck capacity and further raise rates. There has been little change in our near-term loadings outlook over the last several months; however, our longer-term outlook has moved modestly lower.

The economy continues to operate in a modest growth mode, sometimes hinting at upside potential, sometimes the reverse (currently in the ‘reverse’ mode). The result is just enough economic growth to fund 3% loadings growth, a welcome improvement over the sluggish patch in 2011.

FTR expects freight growth to modestly strengthen as the economy grows in the 2% range during 2012. Truck freight will grow close to 4% for the remainder of 2012 and then slow a little in 2013. That is enough growth to tighten capacity. Note that a continuation of current growth levels would be enough to slowly tighten capacity in a market where executives approach any business/fleet expansion warily.

NOTE:
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.