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BTS has reviewed recent movement of freight and determined that transportation services, as measured by the freight TSI, continue to lead the economy. The freight TSI tends to turn in advance of slowdowns and accelerations in economic growth.
The seasonally-adjusted indexed modal data that comprises BTS’ Freight Transportation Services Index (TSI) shows that rail intermodal was followed by trucking at 37.8 percent, pipeline at 29.6 percent, waterborne at 23.2 percent, and air freight at 21.7 percent. During this period the freight TSI rose 29.7 percent.
The sole exception was rail carloads which declined 0.8 percent. The drop in rail carload shipments took place at the same time as a decline in coal shipments. Total coal shipped by Class I railroads peaked in 2008 at 878.6 million tons, dropped to 787.6 in 2009, and continued to fall to 638.1 million tons in 2015.
U.S. Department of Transportation, Bureau of Transportation Statistics, seasonally adjusted transportation data, available at http://www.bts.gov
All modes had declined during the recession as the freight TSI fell 16.3 percent from January 2008 to its low point in April 2009. The biggest decline was in the air freight index, down 26.5 percent, followed by rail carloads, -23.0 percent; waterborne, -18.6 percent; rail intermodal -18.1 percent; trucking, -14.5 percent; and pipeline, -4.7 percent.
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.
Transportation services and the economyBTS has reviewed recent movement of freight and determined that transportation services, as measured by the freight TSI, continue to lead the economy. The freight TSI tends to turn in advance of slowdowns and accelerations in economic growth. The most recent data show two economic accelerations following the recession; the first from June 2009 to December 2012 and the second from July 2013 to December 2014. The freight TSI led both accelerations.
Shaded areas indicate decelerations in the economy (growth cycles). Detrending and smoothing refer to a statistical procedure that makes it easier to observe changes in upturns and downturns of the data. Detrending removes the long term growth trend and smoothing eliminates month to month volatility.
Calculated by U.S. Department of Transportation (USDOT), Bureau of Transportation Statistics (BTS) from USDOT BTS, Transportation Services Index, available at http://www.bts.gov
First published in 2004, TSI measures the volume of freight and passenger transportation services provided monthly by the for-hire transportation sector. BTS research shows that changes in the TSI take place before changes in the economy, making the TSI a useful economic indicator. This relationship is particularly strong for freight traffic as measured by the freight TSI, which BTS research shows leads economic accelerations and decelerations in the economy (known as growth cycles).
Growth cycles highlight accelerations and decelerations in the economy that take place within the larger business cycles (periods of expansion and contraction in the economy). Like business cycles, growth cycles have turning points. Turning points signal the end points of the expansions and recessions of business cycles, and in the case of growth cycles, they signal the endpoints of accelerations and decelerations within the growth cycles.
While the newly identified turns in the freight TSI continue to lead growth cycles, the relationship between the freight TSI and growth cycles changed in 2012.
The freight TSI reached a peak in December 2011 and turned downwards – 12 months in advance of an economic deceleration that began in December 2012. The freight TSI turned again, hitting a trough in October 2012, before the growth cycle peaked in December 2012 and turned downwards (decelerated).
Historically, the freight TSI has not hit a trough and turned upwards before the onset of an economic deceleration. The economic deceleration began in December 2012 and ended in July 2013. The freight TSI peaked in December 2014 and turned downwards at the same time as the growth cycle (Figure 3).
This article first appeared on www.bts.gov
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