Thursday, August 7, 2008

Is freight really picking up?

The American Trucking Association’s chief economist, Bob Costello, made headlines early this month when he reported tonnage shipped by truck in the U.S. rose for the second consecutive month. Costello announced that ATA’s “seasonally adjusted tonnage index” rose 1.2 percent in June. And while Costello was clearly cautious, suggesting that the nation’s overall economy might not yet be on the road to recovery, his comments were received by index watchers as news to cheer about.

The mainstream media seized it immediately, crowing that “total goods” moved by truck – and nearly 70 percent is moved by truck – was up for two months in a row. You can’t blame them, good economic news is scarce. But let’s remember one thing before we get too excited. Costello did not say “total goods.” This index measures the weight of freight hauled by ATA members. It’s based, as it always has been, on ATA’s membership surveys. It does not, and cannot, reflect all loads moved by for-hire or private fleets.

As far as the tonnage, I think the increased tonnage cited by the ATA is likely reflective of their members now grabbing any kind of available freight – including heavier freight they normally would not haul. This makes more sense than an actual increase in the number/quantity/volume of truckload shipments.

Let me point out, too, that mainstream doesn’t pay attention to distinctions like the fact that ATA members are only the nation’s larger motor carriers and private fleets and far from representative of all trucking.

The big picture is that most of the nation’s goods are not carried by these megacarriers. In fact, 86 percent of the freight moved by truck is moved by small-business truckers with six or less trucks. And the freight these trucks haul is everything from soup to nuts. They haul shrubs and flowers, lumber, produce, groceries, retail goods, automotive parts, electronic products, you name it.

ATA does have a membership for smaller carriers. They consider smaller carriers those that gross less than $11 million. According to ATA’s Web site, the lowest membership dues level is for truckers grossing $2 million or less.

Most owner-operators gross an average of about $135,000, based on OOIDA’s surveys.

And for this segment, there’s simply no indication that freight is up. Check out the Journal of Commerce and read about the reduced inflow of container traffic into our ports. The decreases are significant. And these containers are almost exclusively hauled by owner-operators.

It will certainly get better, but right now the soup-to-nuts freight is down overall and the competition to move it is fierce.