Freight Index Rises in June, but Hurdles Remain

(CNN Money – Associated Press)

Truck tonnage increases in June, but trade group economist suggests recovery might be far off

The American Trucking Associations (ATA) said total goods shipped by truck in the U.S. rose for the second consecutive month in June, but the trade group’s chief economist suggested the nation’s overall economy might not yet be on the road to recovery.

Truckers are considered gauges of the nation’s economic health because they often recover ahead of the broader economy, as they transport goods to stock retailers’ shelves in preparation for a rebound in consumer spending. Almost 70% of manufactured and retail goods in the U.S. are carried by truck, according to the ATA.

The ATA said its seasonally adjusted tonnage index, which measures the weight of freight hauled by U.S. truckers based on membership surveys, rose 1.3% in June. The index also hit its highest mark since February. It rose 0.5% in May.

The trade group’s Chief Economist Bob Costello said despite the uptick, the fate of the overall economy still remains unknown. “It seems that truck tonnage is once again leading the U.S. economy,” Costello said in a statement. “Unfortunately, truck tonnage could slow later this year as the overall economy is expected to be quite weak in the fourth quarter and the first quarter of next year.”

Costello noted that during the economic downturn in 2001, trucking demand recovered before the economy fell into a recession.

A key driver in the last two months may have more to do with capacity cutbacks across the sector. High fuel prices have driven many carriers to cut their fleet sizes or sell trucks to foreign buyers in an effort to bring U.S. supply and demand back into balance. Costello predicts that additional fleet reductions will probably continue in the near future.

The Arlington, Va.-based trucking group’s members include FedEx Corp., United Parcel Service Inc., Con-way Inc. and Knight Transportation Inc. Most trucking stocks advanced in morning trading Wednesday as the broader market continued a two-day rally.