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For-hire trucking industry loses 9,300 jobs the past two months

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For-hire trucking industry loses 9,300 jobs the past two months
Data from the Bureau of Labor Statistics showed that for-hire trucking, which includes local, regional and over-the-road companies, lost 5,100 jobs in August and another 4,200 in September. (The Trucker file photo)

WASHINGTON — The for-hire trucking industry has lost 9,300 jobs the past two months, according to the Department of Labor’s monthly job report released Friday, which showed that overall, U.S. employers added a modest 136,000 jobs in September, but enough to help lower the unemployment rate to a new five-decade low of 3.5%.

Data from the Bureau of Labor Statistics showed that for-hire trucking, which includes local, regional and over-the-road companies, lost 5,100 jobs in August and another 4,200 in September.

The BLS said for-hire trucking has lost 4,700 jobs in the first nine months of 2019.

“One reason for the decline is that private fleets have been adding capacity and that’s taking freight out of the fore-hire market,” said Kenny Vieth, president and senior analyst at ACT Research. “So, they are pulling freight out of an already slowing for-hire freight market.”

ACT Research reported September 27 in the latest release of the ACT For-Hire Trucking Index, based on August data, trucking retrenched to contraction in all categories after the large and partly anomalous improvement in July.

The Volume Index pulled back to 48.0 in August, from 56.7 in July (seasonally adjusted). The August Pricing Index, at 47.1 (seasonally adjusted), also returned to negative territory after stabilizing to 50.3 in July.

“While the strong consumer plus pre-tariff inventory building could still help volumes into the holidays, it appears inconsistent in the for-hire market, due in part to the weak manufacturing sector,” said Tim Denoyer, ACT Research’s vice president and senior analyst. “We think the addition of private fleet capacity is also partly responsible. Our for-hire respondents have stopped adding capacity, yet retail tractor sales data tell us capacity is growing. This will likely keep peak season muted in the for-hire market, with seasonal strength still likely closer to the holidays.”

Avery Vise, vice president of truck at FTR, said that as a result of the positive numbers in 2018, carriers began hiring, and that hiring reached a peak right as the demand for those drivers began to soften.

“Since January, the industry has been in a holding pattern,” Vise said.

He also pointed to trucking company failures as another reason the industry is losing jobs.

“Through the first nine months of 2019, there have already been twice as many failures as all of 2018,” he said, pointing to rising insurance rates and companies that “didn’t handle the good times as well as they should have by not controlling costs” as two reasons for the higher number of failures.

“Carriers threw a lot of pay at drivers when things were good, and when things get tight, you can’t take those pay raises back,” he said.

Data on the long-distance segment of the for-hire trucking industry mirrors the rate for all for-hire trucking.

In August, the latest month for which data is available, the long-distance segment, which is primarily over-the-road trucking, lost 4,700 jobs.

As for the job market overall, hiring has slowed this year as the U.S.-China trade war has intensified, global growth has slowed and businesses have cut back on their investment spending. Even so, hiring has averaged 157,000 during the past three months, enough to absorb new job seekers and lower unemployment over time.

Despite the ultra-low unemployment rate, which dropped from 3.7% in August, average hourly wages slipped by a penny, the Labor Department said Friday in its monthly jobs report. Hourly pay has risen just 2.9% from a year earlier, below the 3.4% year-over-year gain at the beginning of the year.

The unemployment rate for Latinos fell to 3.9%, the lowest on records dating back to 1973.

With the U.S. economic expansion in its 11th year and unemployment low, many businesses have struggled to find the workers they need. That is likely one reason why hiring has slowed since last year.

But it’s likely not the only reason. The jobs figures carry more weight than usual because worries about the health of the U.S. economy are mounting. Manufacturers have essentially fallen into recession as U.S. businesses have cut spending on industrial machinery, computers and other factory goods. And overseas demand for U.S. exports has fallen sharply as President Donald Trump’s trade conflicts with China and Europe have triggered retaliatory tariffs.

A measure of factory activity fell in September to its lowest level in more than a decade. And new orders for manufactured items slipped last month, the government reported.

Persistent uncertainties about the economy in the face of Trump’s trade conflicts and a global economic slump are also affecting hotels, restaurants and other service industries. A trade group’s measure of growth in the economy’s vast services sector slowed sharply in September to its lowest point in three years, suggesting that the trade conflicts and rising uncertainty are weakening the bulk of the economy.

The job market is the economy’s main bulwark. As long as hiring is solid enough to keep the unemployment rate from rising, most Americans will likely remain confident enough to spend, offsetting other drags and propelling the economy forward.

But a slump in hiring or a rise in the unemployment rate in coming months could discourage consumers from spending as freely as they otherwise might during the holiday shopping season.

Consumers are still mostly optimistic, and their spending has kept the economy afloat this year. But they may be growing more cautious. Consumer confidence dropped sharply in September, according to the Conference Board, a business research group, although it remains at a high level.

Americans also reined in their spending in August after several months of healthy gains. The 0.1% increase in consumer spending that month was the weakest in six months.

Other parts of the U.S. economy are still holding up well. Home sales, for example, have rebounded as mortgage rates have fallen, helped in part by the Federal Reserve’s two interest rate cuts this year. Sales of existing homes reached their highest level in nearly 18 months in August. And new home sales soared.

Americans are also buying cars at a still-healthy pace. Consumers would typically be reluctant to make such major purchases if they were fearful of a downturn.

The Associated Press contributed to this report.

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Georgia seaports set new record cargo volumes in 2019

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Georgia seaports set new record cargo volumes in 2019
Georgia's seaports are reporting record cargo volumes that moved across their docks in the 2019 calendar year. (Courtesy: Georgia Port Authority)

SAVANNAH, Ga. — The amount of cargo moving through Georgia’s seaports reached record levels in the past year, in part because of continued growth fueled by larger ships traversing the expanded Panama Canal, the Georgia Ports Authority’s top executive said Jan. 28.

The state-operated ports in Savannah and Brunswick handled a total of 38.5 million tons of imports and exports in calendar 2019, the agency reported. That’s an increase of 4.3% compared to last year.

The number of cargo containers, large metal boxes used to ship goods from consumer electronics to frozen chickens, moving across the docks at the Port of Savannah also reached record highs last year. The port handled 4.6 million container units through December, up 5.6% from 2018.

Griff Lynch, the port authority’s executive director, attributed much of the 2019 growth to the expansion of the Panama Canal that opened nearly four years ago. He said shippers are still increasing the size of the vessels using the route, funneling more cargo to the East Coast.

“On the container side, I think it still comes down to the expansion of the canal,” Lynch said. “We’re still enjoying the fruits of that.”

Savannah is the fourth-busiest U.S. port for shipping containerized cargo, behind only the Port of New York and New Jersey, and the ports of Los Angeles and Long Beach, California.

The Army Corps of Engineers is overseeing a $973 million deepening of the shipping channel that connects Savannah’s port to the Atlantic Ocean to make room for the larger ships. Work on the projects second half began in September and is expected to be complete by the end of 2021.

A boost in automobile exports also helped to grow Georgia’s cargo volumes last year. GM and Volvo began exporting vehicles through Savannah last year, with Volvo also shipping cars through Brunswick. Overall, the ports moved more than 657,000 cars, trucks and tractors, up 2 percent from 2018.

Lynch said tariff increases last year during the U.S. trade war with China likely slowed the Georgia ports’ 2019 growth.

Now he expects Georgia to benefit after President Donald Trump signed the first part of a new U.S.-China trade agreement in which China has pledged to buy more U.S. agricultural products.

“We think that’s going to be a big deal for us,” Lynch said. “We’re already seeing it. Poultry is starting to move again, and that has been flat for several years.”

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Business

ATA Truck Tonnage Index increased 3.3% in 2019

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Ata truck tonnage index increased 3.3% in 2019
After falling 3.4% in November 2019, the Truck Tonnage Index recovered in December, posting a 4% monthly increase. (courtesy: ATA)

ARLINGTON, Vir. — American Trucking Associations’ advanced seasonally adjusted (SA) For-Hire Truck Tonnage Index increased 3.3% in 2019, about half the annual gain in 2018 (6.7%). The increase was the tenth consecutive year in which the tonnage index has risen above the previous year.
The advanced SA For-Hire Truck Tonnage Index rose 4% in December after falling 3.4% in November. In December, the index equaled 118.2 (2015=100) compared with 113.6 in November.
“Last year was not a terrible year for for-hire truck tonnage, and despite the increase at the end of the year, 2019 was very uneven for the industry,” said ATA Chief Economist Bob Costello. “The overall annual gain masks the very choppy freight environment throughout the year, which made the market feel worse for many fleets. In December, strong housing starts helped advance the index forward.” It is important to note that ATA’s tonnage data is dominated by contract freight.
November’s reading was revised down slightly compared with the December 2019 data. In December 2018, the SA index rose 3%, which was preceded by a 2% year-over-year drop in November.
The not seasonally adjusted index, which represents the change in tonnage hauled by the fleets before seasonal adjustment, equaled 112.7 in December, 2% below the November level (115.1). In calculating the index, 100 represents the index from 2015.
Trucking serves as a barometer of the U.S. economy, representing 70.2% of tonnage carried by all modes of domestic freight transportation, including manufactured and retail goods. Trucks hauled 10.77 billion tons of freight in 2017. Motor carriers collected $700.1 billion, or 79.3% of total revenue earned by all transport modes.

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Business

ACT Research For-Hire Trucking Index: Rates slip amid strong holiday freight

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Act research for-hire trucking index: rates slip amid strong holiday freight
For-hire index rates slip, but signs of freight recovery in 2020 "encouraging" (©2020 FOTOSEARCH)

COLUMBUS, Ind. – The latest release of ACT’s For-Hire Trucking Index showed improvement in for-hire freight volumes and utilization. The data used in the Index included December. Respectively, the data indicated 55.5 and 52.3 diffusion index readings, both up four points from November on a seasonally adjusted basis. But even as for-hire capacity contracted again, the Freight Rates Index slid to 48.7 in December.
The ACT For-Hire Trucking Index is a monthly survey of for-hire trucking service providers. ACT Research converts responses into diffusion indexes, where the neutral or flat level is 50.
Tim Denoyer, ACT Research’s Vice President and Senior Analyst commented, “We see encouraging signs that the freight downturn is in its late stages and the market will rebalance in 2020. However, the ongoing rate pressure, even as volumes ramped into the holidays, is symptomatic of ongoing excess industry capacity. Our survey respondents clearly get it, and reduced capacity for a sixth straight month, so we can pretty easily deduce that private fleet capacity additions through year-end 2019 are the main factor continuing to pressure for-hire rates.”
The ACT Freight Forecast provides forecasts for the direction of truck volumes and contract rates quarterly through 2020, with three years of annual forecasts for the truckload, less-than-truckload and intermodal segments of the transportation industry. For the truckload spot market, the report provides forecasts for the next twelve months.
In 2019, the average accuracy of ACT’s truckload spot rate forecasts was 98%. The ACT Research Freight Forecast uses equipment capacity modeling and the firm’s economics expertise to provide anticipated freight rates, helping businesses in transportation and logistics management plan with confidence.

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