Industry commentary suggesting a likely April bottom for the freight industry can be supported by new government data showing the worst year-over-year declines in for-hire transportation data since the financial crisis of 2008-09. The dramatic drop in the monthly data highlights what could be the low point in the current freight cycle and provides a relatively easy sequential comparison.
The Freight Transportation Services Index (TSI) fell 10% year-over-year in April according to the Bureau of Transportation Statistics, an arm of the U.S. Department of Transportation.
The monthly index measures the amount of freight hauled by for-hire transportation providers.
The sequential decline from March was 7.7% and marked the third consecutive month-over-month decline. The latest reading of 125.1 sits 11.4% below August 2019’s high water mark of 141.2.
April 2009 was the low for the index at a reading of 94.9. The index recorded a 15% year-over-year decline in that month.
Declines in the data were seen in all modes of the index except pipeline. Falling manufacturing and construction activity was listed as primary causes for freight declines, with the report noting a “particularly steep” decline in rail carloads.
The report cited manufacturing activity was at its lowest level since 1997 as the Purchasing Managers Index (PMI) fell nearly 8 points to 41.5 and industrial production dropped 11.2% during the month. Additionally, housing starts that dropped 30.1% led to the drastic falloff in freight demand. One offset was a 10.5% increase in personal income, which was driven by COVID-19-related government stimulus payments and loans.
For-hire trucking declined sharply in April, following a robust surge in March as pandemic-induced shutdown mandates spread and consumers stocked up on groceries and household essentials. FreightWaves Outbound Tender Volume Index, an index of tendered volumes on a given day, illustrates the surge and drop in truck volumes over that period.
The passenger component of the index for April was withheld, citing “difficulty of estimating air passenger miles and other modes.” Passenger data used for the index is a statistical estimate and the agency doesn’t believe the full impact from COVID-19 is reflected in their model. The passenger component declined 51.4% sequentially in March.
The lows reached in April provide a relatively easy comparison for the freight industry, as many sectors of the economy came back online during May. The sequential uptick in volumes from the likely April bottom has continued into June.
The freight TSI is a seasonally adjusted index measuring sequential monthly changes in for-hire freight shipments. Ton and ton-mile data from for-hire trucking, railroad freight including rail intermodal movements, inland waterways, pipeline transportation (primarily petroleum, petroleum products and natural gas) and airfreight are used to compile the freight index.
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