US Truck Demand Rising Despite Slowing Economy

  • US Truck Demand Rising Despite Slowing Economy

    US Truck Demand Rising Despite Slowing Economy

    The US economy may have contracted in the second quarter, with gross domestic product (GDP) shrinking 1.8 percent, according to an S&P Global estimate, but the volume of freight shipped across the United States continued to grow. And freight demand is still rising, as seen in the increase in transportation employment in June, as well as year-over-year gains in truck ton-miles.

    US for-hire trucking ton miles increased 1.4 percent in May over April and were up 5 percent year over year, according to Jason Miller, associate professor of logistics at Michigan State University. Miller produces a monthly ton-miles index with professor Yemisi Bolumole of the University of Tennessee.

    The May 2022 index reading was 1.6 percent higher than the reading for May of 2018, the strongest year in the pre-pandemic period and the prior record for trucking activity in the month of May, Miller said Tuesday in a LinkedIn post. The Bolumole-Miller ton-miles index has been consistently higher this year than in 2021.

    Miller also sees rising manufacturing employment and transportation employment as indicators of continuing second-half demand for freight services, from ports to warehouses and factories. US manufacturers added 132,000 real jobs in June, while trucking firms added 20,600 jobs.

    “Labor demand remained robust in June and labor markets were still extraordinarily tight, as payroll employment continued to grow at an above-normal clip,” S&P Global said in its IHS Markit US weekly economic commentary Friday. “Strong labor demand…appears to be easing only slightly.”

    S&P Global, the parent company of, reported 1.9 job vacancies for each unemployed person. The low unemployment rate is one reason S&P Global does not believe the US economy entered a recession in the second quarter, despite an estimated 1.8 percent GDP contraction.

    “Sharp declines in net exports and inventory investment contributed to negative GDP growth in the first two quarters of this year, but we anticipate much less drag from those two components over the next couple of quarters,” S&P Global said in its commentary.

    “Furthermore, government consumption and gross investment, which fell sharply in the first quarter and was essentially flat in the second, is poised to rise modestly in coming quarters,” S&P Global said. That implies a return to economic growth, however modest, which could fuel freight shipping this fall.

    Downside risks exist, including tighter financial conditions, volatile fuel costs, and a weaker global outlook, elevating the risk of a recession. But S&P Global’s outlook suggests more freight-generating activity beyond strong imports could be coming in the second half of 2022.

    By: William B Cassidy/JOC

    Leave a comment

    Required fields are marked *

International Tracking