Wednesday, May 23, 2012

Why did ATA's trucking index decline 1.1% in April?

According to the American Trucking Association, April’s seasonally adjusted trucking index declined 1.1% from March 2012. The association’s chief economist, Bob Costello said, “April’s decrease matches an economy that is likely to grow slightly slower in the second quarter than in the first quarter.”

With March and April ocean imports up, retail sales and consumer confidence still positive, what caused the 1.1% decline in the trucking index? Could this decline be due to a shift to rail intermodal?  Perhaps.  For April, US rail intermodal increased 2.0% from March 2012.  However, when asked about a possible shift towards intermodal, ATA stated that the decline would more than likely be attributed to disruptions within the trucking industry itself rather than a modal shift.

Perhaps the decline is attributed to another shift. In a recent Journal of Commerce article, “TransCoreDAT Spot Market Index Jumps 17%”, the spot market for truckload freight jumped 17% year-over-year in April and 3.5% from March. According to TransCore, this is a sign that shippers are turning to the spot market to find trucks as demand rises and capacity at the motor carriers they use under contract remain tight.

Could the ATA’s trucking index represent more of the large scale providers that have contractional relationships with shippers versus the smaller truck providers that are not members of ATA? It’s quite possible based on the differences between the two indices.

The outlook for the trucking industry will prove to be quite interesting to witness. The outlook may be more promising than what the ATA expects - moderate growth of 3% to 3.9% for the year. It just depends on how the US economy holds up against global pressures such as the European economic crisis and China’s economic slowdown.