Introduction to Summary Indicators
Transportation is a service industry, moving people and goods for the benefit of businesses and households. Whether it is a vacation trip, a shipment of raw inputs to a manufacturer, or final product delivery to a consumer, transportation services are a key barometer of economic activity.
The U.S. Department of Transportation’s (DOT) Bureau of Transportation Statistics (BTS) developed and currently produces the Transportation Services Index (TSI) to measure the volume of services provided monthly by the for-hire transportation sector (box 1-1).1
Transportation Services Index
Figure 1-1 shows the steps used to create the TSI, from collecting raw data, through seasonally adjusting and indexing the data, to combining them into summary chained indexes (box 1-2). The green boxes in figure 1-1 highlight the data input and process for the passenger TSI, while the blue boxes highlight the data input and process for the freight TSI. The two indexes are then appropriately weighted to create the combined TSI.
Figure 1-2 illustrates trends in the TSI from January 2000 to March 2016. Overall, the combined TSI increased by 19.0 percent, the freight TSI increased by 13.9 percent, and the passenger TSI increased by 30.9 percent. However, all three measures declined in the wake of the September 2001 terrorist attacks. The passenger TSI dropped especially sharply—19.3 percent from August 2001 to September 2001. All three indexes also decreased sharply during the recession from December 2007 to June 2009. The combined TSI decreased by 19.3 percent, the passenger TSI decreased by 6.6 percent, and the freight TSI decreased by 11.4 percent. However, they have all since recovered to prerecession levels.
TSI and the Economy
The TSI has a strong relationship with the economy, and the TSI has increased as the economy has grown. BTS research shows that changes in the TSI occur before changes in the economy, making the TSI useful for predicting economic trends.2 Figure 1-3 illustrates the relationship between the freight TSI and the national economy from 1979 to 2015. The dashed blue line shows the freight TSI detrended to remove long-term changes. The red line shows the freight TSI detrended and smoothed to eliminate month-to-month volatility as well. The shaded areas represent economic slowdowns, or periods when economic growth slows below normal rates and unemployment rises as a result. The peaks and troughs marked in figure 1-3 show that the freight TSI usually peaks before a growth slowdown begins and hits a trough before a growth slowdown ends.
To understand the relationships between transportation and the rest of the economy, one can compare trends in the TSI with trends in other economic measures. The economic measures are presented as indexes for comparability with the TSI.
Gross Domestic Product (GDP) and Foreign Trade
Gross Domestic Product (GDP) is the broadest measure of the economy. The U.S. GDP includes the monetary value of all goods and services produced within the United States. Between the first quarters of 2000 and 2016, real GDP increased 33.4 percent, and the freight TSI increased by 17.8 percent (figure 1-4). However, due to the recession, GDP decreased 3.6 percent from the first quarter of 2008 to the second quarter of 2009, and the freight TSI decreased 14.6 percent. Both measures have since recovered to prerecession levels. GDP includes many sectors besides transportation, so the magnitude of changes in GDP and the TSI cannot be directly compared.
In addition to domestic value shown by GDP, figure 1-4 includes the real foreign trade index to capture import and export activity. Real foreign trade increased 64.9 percent between the first quarters of 2000 and 2016, outpacing GDP growth. During the recession, foreign trade declined 15.9 percent from the first quarter of 2008 to the second quarter of 2009.
Industrial Production and Manufacturers’ Shipments
Industrial production and manufacturers’ shipments are major sources of demand for freight transportation services (box 1-3). When these shipments declined during the recession, the freight TSI declined as well (figure 1-5). From December 2007 to July 2009, industrial production declined by 16 percent, and manufacturers’ shipments declined by 21 percent. After the recession, industrial production increased by 17 percent, and manufacturers’ shipments increased by 28 percent. However, manufacturers’ shipments recently declined 8.6 percent from July 2014 to March 2016.
When businesses keep greater amounts of inventory on hand, they use less freight transportation. One measure of inventory on hand is the inventories/sales ratio, or the value of goods on shelves and warehouses divided by monthly sales. A ratio of 2.5, for example, would indicate that a business has enough goods to cover sales for 2.5 months. When the inventories/sales ratio rises, the freight TSI declines at the same time or soon after. Conversely, when businesses move greater amounts of inventory and inventories/sales ratio falls, the freight TSI increases.
The U.S. Census Bureau produces a national inventories/sales ratio for businesses in the United States. This ratio has generally declined as businesses adopt just-in-time delivery and learn to manage their inventory more efficiently. From January 2000 to June 2008, the ratio declined by about 9 percent from 1.38 to 1.25 (figure 1-6). During the recession, however, the ratio rose to 1.48 in January 2009—an increase of 18 percent in less than a year. Correspondingly, the freight TSI declined 10.1 percent from June 2008 to January 2009.
Seasonally Adjusted Transportation Data
The monthly data used to create the TSI are highly seasonal, reflecting trends such as stores increasing inventory for the holiday season and households taking vacations in the summer. Seasonal trends make it difficult to observe underlying long-term changes in the data, as well as monthly shifts and short term trends, which are best viewed using seasonally adjusted data (box 1-4).
To portray real changes in the TSI, BTS seasonally adjusts, indexes, and weights the data based on economic value added3 for all transportation modes including truck tonnage, rail freight carloads, rail freight intermodal, pipeline, natural gas, U.S. waterway tonnage, passenger air transportation, rail passenger-miles, and public transit ridership. Figures 1-7 through 1-17 show the raw and seasonally adjusted data for each of the modes included in the TSI, except for truck tonnage, which shows only the seasonally adjusted data.4
Seasonally Adjusted Freight Transportation
Seasonally adjusted truck tonnage increased by 25.4 percent between January 2000 and March 2016 (figure 1-7). After reaching a recession-related low in April 2009, the index has increased by 35.1 percent.
Seasonally adjusted rail carloads decreased by 26.1 percent from January 2000 to March 2016 (figure 1-8). Carloads declined by the greatest amount during the 2007 to 2009 recession, and never recovered to prerecession levels. Moreover, carloads began to decline again in December 2014. In March 2016 carloads dropped to 1.05 million—the lowest amount in the last 16 years, and the first time that carloads have dropped below the recession-era low of May 2009. Rail carloads have declined in large part because demand for coal, the main freight railroad commodity, has decreased. In 2014 Class I railroads originated 18.8 percent fewer tons of coal than in 2008.5
In contrast to rail carloads, seasonally adjusted rail intermodal traffic has increased by 46.0 percent from January 2000 to March 2016 (figure 1-9). It has increased by 39.6 percent from its recession-era low in June 2009, which was still higher than its level in January 2000.
Seasonally adjusted aviation freight ton-miles have increased by 13.1 percent in the last 16 years and by 19.0 percent since their recession-era low in March 2009 but have still not returned to their pre-recession levels (figure 1-10).
Seasonally adjusted waterway tonnage declined by 13.4 percent from January 2000 to March 2016. It has recovered by 41.3 percent since its low in October 2009, though its March 2016 level is below the high it reached in later 2014 (figure 1-11).
Seasonally adjusted petroleum pipeline shipments increased from 212 million barrels of crude oil in January 2000 to 248 million barrels in March 2016, fueled largely by an increase in shipments from August 2014 to the present (figure 1-12). Unlike other transportation measures, which declined noticeably during the 2007 to 2009 recession, pipeline shipments declined steadily over a longer period from late 2004 to late 2009.
Seasonally adjusted natural gas consumption, which measures transportation of natural gas by pipeline, has increased by 17.9 percent since 2000 and is highly seasonal (figure 1-13).
Seasonally Adjusted Passenger Transportation
Seasonally adjusted air passenger-miles have increased by 40.9 percent in the last 16 years (figure 1-14). They reached their lowest point in September 2001 following the 9/11 terrorist attacks, but have increased by 74.0 percent since that point.
Seasonally adjusted transit ridership has increased by 10.2 percent in the last 16 years, but has not yet recovered to the high points reached in July 2008, just before the recession, and the even earlier May 2007 peak (figure 1-15).
Seasonally adjusted rail passenger-miles have increased by 21.3 percent since 2000. They reached their highest level in April 2012 (figure 1-16).
While the TSI measures for-hire transportation services, BTS also seasonally adjusts data for highway vehicle-miles traveled (VMT) to show trends in travel volumes. Seasonally adjusted VMT has grown by 16.7 percent since January 2000 (figure 1-17).
1For-hire transportation consists of the services provided by transportation firms to industries and the public on a fee basis. Airlines, railroads, transit agencies, common carrier trucking companies, and pipelines are examples of for-hire transportation. Other types of transportation are discussed in Chapter 2 in the context of the Transportation Satellite Accounts.
2 See U.S. Department of Transportation, Bureau of Transportation Statistics, TSI and the Economy Revisited, December 2014, available at https://cms.bts.gov/archive/publications/special_reports_and_issue_briefs/special_report/2014_12_10/entire
3 Value added is defined as industry gross output less purchased materials and purchased services.This is a measure of the size of an industry sector used by economists.Value added for all industries sums to Gross Domestic Product.
4 Seasonally adjusted truck tonnage - is calculated from the American Trucking Association Monthly Truck Tonnage Report. For unadjusted truck tonnage data, contact the American Trucking Association.
5 See Association of American Railroads, “Railroads and Coal,” July 2015, available at https://www.aar.org/BackgroundPapers/Railroads%20and%20Coal.pdf