What is the truck tonnage index?
In the previous part of this series, we looked at the 3Q17 cash distributions of the US truckload carriers we’re covering in this series: JB Hunt Transport Services (JBHT), Landstar System (LSTR), Werner Enterprises (WERN), Ryder System (R), and Heartland Express (HTLD). Now let’s take a look at the truck tonnage index (or TTI). The ATA (American Trucking Associations) calculates the TTI based on surveys from members since the 1970s. The TTI is used to measure economic activity in the industry in the United States.
October 2017 TTI
The ATA’s advanced seasonally adjusted index of for-hire trucks rose 3.3% to 147.6 in October 2017 on a sequential basis, from 142.9 in the previous month. The same index fell 1.9% in September 2017 on a month-over-month basis. On a YoY (year-over-year) basis, the seasonally adjusted TTI rose 9.9%, the biggest YoY gain since December 2013. In September, the index rose 6.3% compared with the same month last year.
Most notably, on a year-to-ten-month basis, the index rose 3.1% in the first ten months of 2017.
What the ATA chief said
According to Bob Costello, chief economist of ATA, “Continued improvement in truck tonnage reflects a much stronger freight market. This strength is the result of several factors, including consumption, factory output, construction and improved inventory levels throughout the supply chain. Additionally, the 6.7% rise in tonnage over the last four months suggests to me that retailers are expecting a good holiday spending season.”
According to the ATA, trucking (WERN) companies represent 70.6% of tonnage hauled by all modes of domestic freight transportation. It said that motor carriers garnered $676.2 billion in 2016, representing 80% of all transport modes’ total revenues that year.
To avoid company-specific risks, you can invest in the iShares Global Industrials (EXI). Major US railroad (UNP) companies and airline (DAL) companies make up 4.3% and 6.2%, respectively, of EXI. Among our US truckload carriers in this series, JB Hunt Transport Services (JBHT) forms 0.2% of the portfolio holdings of EXI.
Next, let’s see what Thomson Reuters-surveyed analysts think about the US truckload carriers in this series.