Tag Archives: labor economics

ATA Truck Tonnage Index Rose 0.5% in May

Truck tonnage saw a slight increase in May, according to the latest American Trucking Associations (ATA) survey of its members.

This index is considered quite reliable. Its base year is 2015, so a value of 117.1 shows the percent gain since 2015. On the graph below you can see the big plunge in early 2020 due to COVID, the rapid recovery, and the more recent upward trend. There’s nothing to make you believe the general upward trend over the last 6 months is broken yet.

Source: ATA website https://www.trucking.org/news-insights/ata-truck-tonnage-index-rose-05-may

The index is dominated by results from contract trucking. The ATA release proposes a theory about the relation with the spot freight market, which has been slowing.

If a recession arrives, we can predict a tailing off of the need for trucking. We hear that inventories are replenished at most big box stores, so demand for refilling may be down. At the supermarket we still see spot shortages, but not like over the winter. The threat to trucking volumes would be if consumers slow down their buying, forcing outlets to reduce inventories.

We hear anecdotally almost that the driver shortage is much less severe than it was over the winter. We also hear that more drivers are exiting ownership, which is affecting used truck auction prices. We don’t know if these drivers were captured in the ATA survey.

Perhaps there’s a downturn coming. Transportation is often a reliable index of the quality of the economy.

ATA Truck Tonnage Index Rose 0.5% in May | American Trucking Associations

ATA Truck Tonnage Index Rose 0.5% in May | American Trucking Associations

How effective was aid to business during COVID-19?

This podcast moderated by David Wessel of Brookings is very informative. It’s an assessment of the success and failure of several programs of aid to businesses the US government put forth when COVID-19 started to dampen US business activity.

The level of financial support offered to businesses during the pandemic was unprecedented, and clearly kept the decline in consumption less serious than it was feared.

There has been a lot of criticism of these programs, some positive and some negative. It’s important to understand how the programs did work and how they did not. In the future we may be faced with other economic crises and we should know which features worked as intended and which did not, and why not.

It’s a good listen, and there is also a link to a transcript.

How effective was aid to business during COVID-19?

How effective was aid to business during COVID-19?

Trucking demand near recession levels: Bank of America

We’ve seen a catastrophic drop in demand for trucking freight. It’s natural given the very high prices for truck hauls recently. Now tender rejection, a measure of how often trucking firms reject contracted loads to go after higher-paying spot market loads, has dropped to around 9% from well over 20%.

Does this mean that the inventory buildup also is about over? We hear conflicting things from the maritime front. There are still ships waiting to unload, even though Shanghai has reduced its shipping considerably. Many firms have gone to private shipping rather than using the liner alliances. But the containers still seem to be coming.

It’s a good question what portion of the trucking drop is to be attributed simply to the high prices, and what part to the actual reduction of demand.

I think it may be the high prices. They may be inducing shippers and buyers to hold off to keep logistics costs down. Buying larger orders less often is a good way to reduce total inventory cost, even if you leave out quantity discounting. So firms can plan to buy later. It may pay off with reduced trucking need and lower truck haul prices.

So is there a driver shortage? We may be training a bunch of new drivers just as the demand for them is cratering. How is that good for those people?

Rachel Premac kMonday, April 25, 2022

Trucking demand near recession levels: Bank of America – FreightWaves