Trucking trends are one of the key early indicators of the economic activity. This is probably not one of the most watched indicators but it does show the economic activity in the trenches. Best of all, this indicator is as close to reflecting the revenue trends at one of our holdings as you can possibly get.

[private_premium]

American Trucking Association reports that the Truck Tonnage index inched up 2.1% in August. This is on top of the 2.1% increase in July. It is still down 7.5% year over year but this is the best performance of the index this year.

Truckers are the lifeblood of Travel Centers of America (TA), one of our key holdings. Increased tonnage may and should indicate increased number of trucks on the roads (assuming businesses were making rational decisions and not shipping trucks half empty during the depths of the recession). With the volumes increasing, this should have a positive effect on TA’s revenues, both Fuel and non-Fuel.

In fact, with increase in trucking volumes, one can reasonably expect that the truckers will feel more secure in their jobs and would be more willing to open up their wallets at the truck stop restaurants and convenience stores. This is where the company generates most of its margins.

[/private_premium]

Overall the trends are encouraging and while there is no guarantee that they will continue, there appears to be enough momentum gathering in the economy that one can be hopeful. If nothing else, this holding still trades at a significant discount to its intrinsic value so there is enough margin of safety left.