TT_051519_AllPages

22 • May 15-31, 2019 Business
THETRUCKER.COM
b Tonnage from page 19 b
Compared with March 2018, the SA index
increased 1.6 percent, down from February’s
3.9 percent gain. During the first
quarter, tonnage was up 3.8 percent from the
same period in 2018.
The not-seasonally adjusted index, which
represents the change in tonnage actually
hauled by the fleets before any seasonal adjustment,
equaled 116.3 in March, 10.3 percent
above February’s level of 105.5.
The ATA Tonnage Index is calculated
from data supplied by the organization’s
members and is a useful tool in predicting
trucking trends. Combined with other economic
factors, carriers can obtain a better
idea where the market is heading and plan
accordingly.
In one development, the U.S. Federal Reserve
System made a policy announcement
May 1 in which it indicated concern with the
very low inflation rates the country is currently
experiencing. The Fed statement said
that that no significant cuts to interest rates
are planned for the remainder of 2019. Interest
rates are typically cut when the Fed wants
to stimulate the economy to faster growth, a
position encouraged by President Trump.
Too much growth, or a growth rate that’s too
fast, can lead to increased inflation, bringing
additional problems, prompting the Fed’s
wait-and-see attitude.
Although consumer spending has slowed
in recent months, there was an increase of
0.7 percent in March, an indication that the
economy is still growing. At the same time,
construction spending fell, with spending on
single-family homes currently at a pace 8.2
percent behind the pace at this point in 2018.
U.S. manufacturing also weakened in
March, with declines in primary metals,
petroleum/coal products and transportation
products.
As for the trucking industry, North America
Class 8 preliminary orders fell in April
from an already down March, reaching a
31-month low, according to a May 2 release
by ACT Research. Orders in April were 57
100% Owner Operated for Over 40 Years
percent lower than in the same month a year
ago. The biggest reason for the decline, according
to ACT, is the large backlog of
trucks already ordered and yet to be built.
“We continue to contend that current order
weakness has more to do with very large
Class 8 backlogs and orders already booked,
than with the evolving supply-demand balance,”
said ACT President and Senior Analyst
Kenny Vieth.
A similar situation exists with orders
for Class 8 trailers, which also declined in
March, for the fourth consecutive month.
The backlog of trailer orders is large enough
to keep the manufacturers busy for the rest of
2019, so anything ordered now wouldn’t be
delivered until some time in 2020, when economic
conditions could be much different.
Vieth spoke to some of those conditions
in the tractor-orders release, saying, “Of
course, contracting freight volumes, falling
freight rates, and strong Class 8 capacity additions
suggest that the supply-demand balance
will become an issue later this year.”
That simply means that the industry’s capacity
to haul freight is still growing faster
than the available freight is. Sooner or later,
something has to give, and that something
usually starts with freight rates.
Spot freight rates, usually the first to
change, have been falling for the past three
months in the van and refrigerated sectors
while remaining flat in flatbed, according to
a May 7 DAT Trendlines release. Both van
and refrigerated rates have shown a small increase
so far in May, which could be more
due to seasonal factors than anything. Summer
is usually great for freight, but with more
trucks added each month the usual summer
increase could be somewhat subdued. 8
ALWAYS
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