Activity Index

The TranSystems Transportation Activity Index tracks and gathers in one place key and timely measures of transportation activity across all the sectors – freight rail, passenger rail, trucking, air cargo and air passenger, ports and harbors, manufacturing and the supply chain, and the state and Federal departments of transportation. That data is allied with key economic, demographic and production data that drive or affect the movements of goods and people. The TTAI is issued once a week and the accompanying commentary weighs and draws meaning from the numbers; identifies trends, patterns or inconsistencies; provides context and history; and does not hesitate to offer forecasts for both the transportation economy and the larger economy.

January TranSystems Transportation Activity Index Update
March 18, 2015
Drop Continues in January. The TranSystems Transportation Activity Index report for January was released this week, and we saw continued slippage across every component tracked. Fuel prices and the plummeting of the bulk commodities indexes were pushing transportation demand metrics downward. Every index across all four modes plus the composite is now in contraction territory (anything below 50 is contracting).

The composite reading across all transportation modes came in at 45.8, down 2.4 points from 48.2 posted in December. It was also for the seventh month in a row lower than it was at this time last year. The composite plummeted 11.2 points lower than the 57.0 posted in January of 2014. All of the indexes slipped into the contraction territory in January as mentioned (below 50). Indicators from around the world show that transportation activity is slowing. The Baltic Dry Index hit a new modern all-time low of 559 points, this is the lowest in more than 30 years for the index. Since the BDI shows demand for bulk goods in the world’s busiest trade lanes, there is concern that early stage manufacturing is suffering more than perhaps being reported.

The rail sector was down 2.1 points in February to 44.5. It was still the weakest index in the report and was a full 10.3 points lower than it was last year at this time. Focusing on the year-to-date figures from the Association of American Railroads, oddly many of the categories are still positive – except one of the most important when it comes to the national economy. Total carloads are still up by 5.6% YTD. Other primary commodity categories include coal shipments (+4.4%), Grains (+10.4%), intermodal (+.9%), Nonmetallic minerals and products (+13.6%), motor vehicles and parts (+6.8%), petroleum and petroleum products (+6.9%), forest products (+3.6%) and total traffic (+3.4%). The major one that is off is the “other” category (which includes waste). Studies show that it has an 82% correlation to US GDP and it was off 7.9% year-over-year through January.

Trucking was also lower in January, falling 2.4 points to 46.0 over December’s volumes and falling 11.7 points from 57.7 posted last year in January. Since the index is so negative, we have tried to corroborate what the index is perhaps reading on the demand side with other sources. We see in the DAT Trendlines data that loads are down 12% against December’s levels and down 15% against January of last year. We also see that capacity has surged and is 34% higher than it was last year at this time. Using a blended reading, DAT gives us a summary figure in its load-to-truck figures and they show a drop of 25% between loads looking for trucks in January vs. December of 2014 and a 38% drop between January 2015 and January 2014. Using these numbers, it would seem that perhaps the TTAI figures are not incorrect.

Air cargo also slipped in January, but by a far lesser margin. The January TTAI for air cargo fell 1.5 points to 49.0, just below the critical 50 mark. Year over year, the index was down 3.4 points from January of 2014. Since fuel prices are lower, air cargo prices are also lower. And, with some weakness in the broader manufacturing and retail sector in January, companies are keeping their inventories tighter. That has likely helped keep air cargo a bit higher than it would normally be at this time of the year.

Maritime was also weaker month-over-month as the index fell by 1.6 points to 47.0. It was also in contraction and was 3.4 points lower than the index a year ago. As we mentioned prior, there are a lot of odd happenings in the maritime sector at this time. The US dollar has made US imports more attractive – but it has killed US export activity. There are also still challenges on the US West Coast with throughput which has backed up the world’s maritime activity – but not enough to push the Baltic Dry Index back up where it should be. The BDI hitting 30 year lows and global activity slowing is a bad sign for the broader economy.

If the TTAI is not misinterpreting data at this time, the global economy is in for much more weakness than what is being reported at this time.
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