The weight of goods truckers hauled in July fell again from the previous month, but experts say the dip is more a symptom of supply chain issues than of the industry's well-being.
In the first full month of summer, the For-Hire Truck Tonnage Index slipped 1.2% from June, totaling 109.8, according to the American Trucking Association. The drop marked the fourth straight month that the index decreased from the previous 30-day period. Back in March, the reading was 115.1. The all-time high was 142.7, which occurred in February 2016.
ATA Chief Economist Bob Costello said that the drop in freight volumes has everything to do with supply chain bottlenecks, which have been an ongoing issue for business owners since the COVID-19 shutdown.
"Softness in tonnage over the last few months is due more to supply constraints, rather than a big drop in freight volumes," Costello explained.
Costello also attributed the consistent dip in the monthly tonnage index to a long-standing challenge for the industry: not enough drivers. He noted that with fewer truckers and trucks, it's difficult to reverse the trend; more means of transport would naturally help to increase the number.
Shipping woes affecting ports
The trucking industry isn't the only one encountering challenges with shipping. Ports are facing their own frustrations, particularly with shipping containers. As reported by the Wall Street Journal, the steel boxes used to transport goods by sea are in short supply worldwide. Complicating matters further is how much they cost to buy. At an annualized price of nearly $6,000 for a standard 40-foot shipping container, the expense today is more than double what it was in 2016.
The July tonnage report marks the first time since March that the seasonally adjusted index slipped on an annual basis. In June, it was unchanged but the July reading is off from the same time last year by close to 3%. On a year-to-date basis, though, tonnage is down 0.2% from what it was through the first seven months of 2020.
Tonnage index reaches its height later in the year
Generally speaking, the truck tonnage index reaches its peak in any given year during the holiday season. This is traditionally the time when orders intensify as buyers purchase from online retailers. For instance, ATA's For-Hire Tonnage Index this past December hit 120, an eight-point rise from November, or 3.2%. The score was also higher than the 2019 reading. For the year as a whole, tonnage was down 3.3% compared to 2019.
Although it remains unclear how 2021 will compare with 2020, given the uptick in inflation and the fallout from the Delta variant, the National Retail Federation anticipates retail sales will top $4.4 trillion, when including in-store as well as online. This forecast is due, in part, to more Americans getting vaccinated. Approximately 50% of the U.S. population has received all the necessary dosages to achieve maximum immunity from the virus, according to the most recent figures available from the Centers for Disease Control and Prevention.
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