Tuesday, February 14, 2012

Trucks & Trains

Keep on trucking! This seems to be our economy’s new motto. The American Truck Association (ATA) Tonnage Index sank to a cyclical low of 100.2 during April 2009. That was the weakest since January 2002. It has been recovering since then and rose to 116.6 during November of last year, which matched the previous cyclical high during 2008. The truckers must have put the pedal to the metal during December because the ATA index soared 6.8% to a record high of 124.4. This is yet another indicator suggesting that the recovery is over and that the economy is expanding into record territory. Let’s have a closer look at the truck tonnage data and see if they are confirmed by railcar loadings, which is another very useful transportation indicator:

(1) Truck Tonnage. For all of 2011, truck tonnage rose 5.9% over the previous year--the largest annual increase since 1998. Tonnage for the last month of the year was 10.5% higher than December 2010, the largest year-over-year gain since July 1998. ATA notes that trucking serves as a good barometer of the US economy, representing 67.2% of tonnage carried by all modes of domestic freight transportation, including manufactured and retail goods.

(2) Total Railcar Loadings. I monitor the weekly data on railcar loadings by smoothing out the data using 26-week moving averages. On this basis, total loadings have stalled around the recent cyclical high in recent weeks. They are 19% above the 2009 low, but still 10% below the 2006 record high. Car loads, which carry bulk commodities, remain on a gradual uptrend. Intermodal loadings, which include containers and trailers, are also on an uptrend, which has stalled recently.

(3) Railcar Loadings by Product. Since early 2009, there have been V-shaped rebounds in car loadings of chemicals & petroleum products and metals & related products. Still depressed are coal, nonmetallic minerals, pulp & paper products, and waste & scrap material. Lumber & wood products remain depressed, but have been gradually trending higher since early 2010. Most encouraging, and consistent with the Double Recovery scenario, is that motor vehicle loadings rose to a new cyclical high in early February. They are highly correlated with auto production.

(4) Intermodal. The ATA truck tonnage index is most highly correlated with intermodal railcar loadings, especially intermodal containers. The difference between total intermodal loadings and intermodal containers is the relatively small loadings of intermodal trailers, which remain near the recent recession lows. The loadings of intermodal containers rose in January to a record high, confirming the strength in truck tonnage during December. (More for subscribers.)

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