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October tonnage index sees biggest monthly decline in over two years


The For-Hire Truck Tonnage Index in October experienced its sharpest decline since the pandemic.

From increased truckload capacity in one month to robust job growth the next, the trucking industry is exhibiting mixed signals as to the health of its current economic state. In this way, it's been similar to the nation's economy, as various diverging indicators paint an opaque picture about its direction.

The latest tonnage report only adds to the cognitive dissonance, as the index fell sharply in October.

In the first full month of fall, the For-Hire Truck Tonnage Index dropped 2.3% on a seasonally adjusted basis, the American Trucking Associations reported. This comes after the measure rose by just shy of 1% in September compared to August.

Bob Costello, chief economist for the ATA, pointed out that the 2.3% decline was the biggest monthly dip for the index since early 2020, when lockdown measures precipitated by COVID-19 cratered the measure, albeit briefly. He also noted that the trend line reflects overall economic conditions, as the effects of inflation are beginning to manifest themselves through dwindling demand.

"Housing is a weak spot in freight in addition to a slowing in personal consumption of goods," Costello explained. "While factory-related freight is holding up better than other areas, it is also decelerating."

Similar to home sales, housing starts are down throughout the country, which has led to less business for motor carriers transporting the building materials firms need for construction to take place. In October, starts fell 4.2% to a seasonally adjusted annual rate of 1.4 million projects, the National Association of Home Builders reported from government data. And among single-family properties, typically the most common project type for home contractors, those decreased by slightly more than 6%.

Employers continue to recruit
Despite the dip in tonnage, hiring activity for truckers remains robust, contributing to the lack of clarity about the trucking industry's economic trajectory. In November, for example, a seasonally adjusted 1.6 million truck transportation jobs were added to the economy, FreightWaves reported from BLS data. That's approximately 1,300 more than in October. Additionally, the BLS adjusted September's job numbers higher by 4,600. Prior to the revision, September had produced the largest one-month decline in hiring activity over the past two years.

Tonnage is also in a stronger position this year than at the same time in 2021. Indeed, the measure was ahead by nearly 3% in October compared to 12 months ago, the American Trucking Associations reported. This marked the 14th consecutive year-over-year gain for the For-Hire Truck Tonnage Index.

Encouraging though these signs may be, motor carrier executives get the feeling that lean times may be ahead, especially considering the fourth quarter is typically the best period for business activity.

"Everybody's [indicating a] flat to a soft, muted peak season," Jim Gattoni, the president and CEO of a leading trucking entity, told FreightWaves. "Since our July call, I would say things have clearly softened up compared to the anticipation of a better peak season."

"Softening" might also be said of global economic conditions, since many experts are forecasting a deepening recession in 2023.

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