Truck loadings grow in June

In total, June data came in just slightly better than expected, but revisions to prior months pulled Q2 loadings noticeably higher. Digging deeper into the data shows that not all segments were treated equally. The traditional long-haul dry van and refrigerated markets performed better than expected, but the Bulk/Dump segment did notably worse. The FTR loadings data continues to show that growth remains well below the levels normal for a mid-recovery period. June saw a gain of just 0.2% from May to 58.933 million loadings. This follows an upwardly revised gain of 2.5% in April and a downwardly revised decline of 0.9% in May. The year-over-year growth remains stuck in a narrow band around the 2% mark, at 2.5% in June.

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 been generally stagnant except for a strong surge that occurred in April. Volumes have grown for the last three quarters after being essentially flat for the three prior quarts.

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 full year growth for 2012 moved slightly higher on the basis of the improved Q2 data. We are looking for growth of 3.2% in 2012 – not robust but still above its historical average. Our forecast for 2013 and 2014 is unchanged, up 3.1% in 2013 and 3.6% in 2014.

As long as monthly volumes continue a modest upward trend then year-over-year growth will slowly move towards 4% by Q4. Comparisons will then ease as we get into early 2013. 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.

Analysis
The industrial forecast for both 2012 and 2013 has been lowered over the last few months. This has strong implications for the truck markets as industrial activity accounts for the lion’s share of trucking movements. The reduction in industrial output highlights that we are unlikely to get much stronger growth during this recovery.

Total truckloads grew slightly in June after declining in May. After being flat through most of 2011, truckloads have grown fairly well for the last eight months – with much of that growth attributed to just two months. Growth has been led by dry vans and flatbeds. We expect steady 3% growth over the next two years.

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.

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. Those indicators have been rising, as of late.

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.