Tank loadings unchanged in May
July 5, 2012
Tank loadings remain a disappointment during this recovery. Strength in basic chemicals and drilling suggests higher growth rates than recorded. Loadings in May were at 0.291 million – unchanged from both last month and last year. The outlook moved significantly lower as the chemical and fuel markets are expected to show considerable weakness over the next year.
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 but the market weakened considerably during 2011, with a big drop in Q3. Volumes ticked up solidly in Q1 but have weakened since then and Q2 is looking to be flat.
Tank loadings fell 9.0% in 2008 and 5.8% in 2009. Volumes were nearly unchanged in 2010, up just 0.7%. 2011 wasn’t much better with loadings growing just 1.8%. Growth will remain weak for this recovery, rising just 0.6% in 2012. The forecast took another big hit this month as we significantly reduced our chemicals outlook. Still, the year-over-year comparisons should improve during the latter half of 2012. Growth will remain very weak, rising just 0.7% in 2013 and 1.2% in 2014.
Tank loadings have been the big disappointment during this upturn. We expected more growth due to the low cost of natural gas feedstock.
We now see three explanations: First, fuel demand is down; U.S. driving declined again last month. Second, the oil drilling market is hidden in the data. Growth there is invisible in the stats. Third, any increases in U.S. exports of chemicals, due to lower costs, is denied to trucks because most major U.S. chemical exporters are on salt water. The volume goes by ship.
Note that any reductions in natural gas drilling have been offset by increases in oil drilling, also using fracking. This same activity is helping the flatbed sector.
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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