- For-hire contracted tonnage dropped 8.3% in July, the fourth-straight year-over-year (YoY) decline, according to a Tuesday news release from the American Trucking Associations. Year-to-date tonnage dropped 3.2%. On a month-to-month basis, tonnage fell 5.1% in July, after increasing 8.9% in June, the ATA said.
- Capacity issues could be one reason for the July drop. "Other ATA data shows that for-hire truckload fleets are operating 3% fewer trucks this summer than a year earlier, so it can be difficult to take on a significant amount of additional freight," Bob Costello, ATA chief economist, said in the release.
- The capacity problem led carriers to lose a surge in July retail volume to the spot market, Costello said. The ATA's tonnage index only measures contracted tonnage.
At least 23 large retailers filed for bankruptcy in 2020. But consumers are still buying, though habits have changed. Perhaps the biggest change has stemmed from the shift to working remotely, as consumers tailor their needs to expected time at home, rather than at the office.
"It's more retail than industrial," said Tim Denoyer, ACT Research vice president and senior analyst. "The overall [trucking] market is stronger than the tonnage number indicates." The industrial sector remained "lackluster" in July, according to Panjiva.
Online shopping, done by consumers who have postponed vacations, likely contributed to the stronger retail volumes, said Target CEO Brian Cornell, speaking to analysts about his company's second quarter earnings. Target posted a big Q2, which ended Aug. 1, that included its best-ever comparable sales growth, of 24.3%, according to a press release.
"In the pandemic, we’re not going to restaurants, we're not going to movies," said Cornell, speaking on CNBC's Squawk Box. "Those traditional summer trips have been canceled. We're not on planes. We're not spending dollars on lodging, so many of those dollars have been redirected into retail."
Denoyer said capacity is a real issue for many carriers, as some drivers have not returned from layoffs. And there is retail inventory tightening too, Denoyer said, with efforts to replenish underway.
All of those factors are contributing to a stronger trucking market. Total trucking demand is currently on par or above where it was in February, pre-pandemic said Aaron Terrazas, director of economic research at Convoy.