The Freight Transportation Services Index (TSI), which is based on the amount of freight carried by the for-hire transportation industry, rose 1.0 percent in December from November, rising for the third consecutive month, according to the U.S. Department of Transportation’s Bureau of Transportation Statistics’ (BTS). The December 2016 index level (124.7) was 31.7 percent above the April 2009 low during the most recent recession.
The level of freight shipments in December measured by the Freight TSI (124.7) was equal to the all-time high reached in July 2016.
The November index was revised to 123.5 from 123.2 in last month’s release. Monthly numbers for August through October were revised up slightly and monthly numbers from January through June were revised down slightly.
The Freight TSI measures the month-to-month changes in for-hire freight shipments by mode of transportation in tons and ton-miles, which are combined into one index. The index measures the output of the for-hire freight transportation industry and consists of data from for-hire trucking, rail, inland waterways, pipelines and air freight. The TSI is seasonally-adjusted to remove regular seasons from month-to-month comparisons.
Analysis: The December Freight TSI grew by 1.0 percent from the previous month due to increases in trucking, pipeline, rail intermodal, and water, while air freight and rail carloads declined. The December increase was driven by economic growth. The Federal Reserve Board Industrial Production index rose by 0.8 percent in December, with growth in both manufacturing and utilities, even as mining production declined. Employment and Personal Income both grew in December, though housing starts were off by 0.2 percent.
The 2.9 percent fourth quarter increase from the previous quarter took place as Gross Domestic Product (GDP) growth slowed to an annual rate of 1.9 percent from 3.5 percent in the third quarter, while Industrial Production grew by 0.4 percent. The fourth quarter slowdown in GDP growth was preceded by a third quarter decline in Freight TSI and the rapid GDP growth in the third quarter was preceded by a strong increase in Freight TSI in the second quarter.
Trend: The 1.0 percent increase in December was the third consecutive monthly Freight TSI increase. These three months of increases, following two months of declines brought Freight TSI to its highest level ever, matching the record high level of 124.7 in July 2016. The December level was 2.9 percent above the level at the start of 2016.
The 2.9 percent fourth quarter increase followed a decrease of 1.1 percent in the previous quarter, for a net increase of 1.8 percent over the last six months. The fourth quarter increase was the largest increase in freight TSI since the fourth quarter of 2011. Freight TSI increased in two of the four quarters of 2016 for an annual increase of 2.9 percent, after declining in three of the four quarters of 2015, for an annual decline of 2.0 percent. The Freight TSI is now 1.8 percent above the level of two years ago at the beginning of 2015. The index remains high compared to earlier years, rising 31.7 percent since the low of 94.7 in April 2009.
Index highs and lows: For-hire freight shipments in December 2016 (124.7) were 31.7 percent higher than the low in April 2009 during the recession (94.7). The December 2016 level was equal to the all-time high reached in July 2016.
4th quarter changes: The Freight TSI rose 2.9 percent in the fourth quarter, the largest quarterly increase since a 3.5 percent rise in the fourth quarter of 2011.