Viewpoint: Trucking to enter steady growth in 2020

  • : Oil products
  • 19/12/26

The US trucking industry faced economic uncertainty in the last half of 2019, but should find steadier driving by the start of the second quarter of 2020.

Seasonally-adjusted for-hire trucking fell in November to an index of 113.5, down by 7.2pc from the yearly high set in July amid reports of lower demand during the fall freight season, according to the American Trucking Association (ATA). The ATA index, dominated by contract freight, is calculated based on survey responses from ATA members on tonnage hauled by fleets. It awards 100 points for every 2,015t hauled.

Despite economic headwinds, trucking is up by 3.3pc year-to-date compared with the same period last year.

The July increase in the ATA index was reflected in higher US diesel demand, according to Energy Information Administration (EIA) data. In August, implied demand for distillate fuel oil, which includes ultra-low sulfur diesel (ULSD) reached 123.3mn bl.

US trade with Canada and Mexico reached yearly highs through the later stages of the third and early parts of the fourth quarter of 2019. Exports to Canada reached $25.3bn in August, while imports were highest in September at $26.9bn, according to US Census Bureau data. Trade exports to Mexico reached a high of $22.3bn in October, while imports from south of the border registered the highest total in August at $31bn.

EIA's Short Term Energy Outlook shows a -0.3pc decrease in demand for diesel in the first quarter of 2020 at 4.22mn b/d, but a 0.2pc uptick in diesel demand is forecast in the following three months. The EIA cited two factors for the slight dip in the first quarter tally. First, a decline in EIA's distillate fuel-weighted manufacturing index, which is forecast to fall by 1.3pc in the first quarter of 2020 compared with the first four months of this year. Secondly, the EIA forecasts 1.3pc fewer heating degree days in the Mid-Atlantic and New England regions, which the EIA estimates consumes about 80pc of the US heating oil usage.

More stable trucking industry growth is expected in 2020 with the implementation of the US-Mexico-Canada Trade Agreement (USMCA). USMCA, which will replace the 25 year-old North American Free Trade Agreement (NAFTA), passed the US House of Representatives on 19 December, with ratification in the Senate is expected in January 2020.

By Jason Metko

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