Gradually slowing spending growth is pulling freight volume down with it. The Heavy Duty Trucking freight volume index increased 1.1 points to 151.3 in the third quarter. The annual growth rate of the index slipped just under 3.5% after nearly two years in the 6-7% range.
Manufacturers relied on a substantial drawdown of inventories during the summer for production and sales, meaning lower than usual freight requirements. This temporary drop in inventories will be reversed in the next few months. As a result, the HDT freight volume index is expected to increase at a 4.1% annual rate in the fall, despite continued slowing in overall economic growth.
Freight volume gets a boost from the recent turnabout in manufacturing exports to meet higher demand in the now expanding Asian and European economies. The freight index will average 6.7% higher in 1999 after a 6.8% gain last year. However, growth will drop to 3.6% next year.
Over the next year, freight volume is likely to decline for construction materials, except aggregates for heavy construction, and possibly for food and feed grains, depending on how long farmers can hold out for higher prices. Import and export tonnage will be growing nearly twice as fast as domestic shipments within the United States. Trade with Asia and Mexico will be expanding much faster than trade with Europe and Canada.
The HDT freight volume index is an inflation-adjusted measure of consumer and investment purchases plus exports.