Transportation Trends in Focus

RITA Bureau of Transportation Statistics

U.S. Department of Transportation

Research and Innovative Technology Administration

September 2009

The Freight Transportation Services Index as a 

Leading Economic Indicator

By Peg Young, Ph.D. and Ken Notis

TTIF-002

The Bureau of Transportation Statistics’ (BTS) freight Transportation Services Index (TSI) showed a decline a full year 

and a half prior to the start of the current recession. This 

downturn suggests the TSI may prove particularly useful 

as an indicator of economic downturns. Leading economic 

indicators identify and anticipate emerging turns in the current 

business cycle by historically turning downward before a recession or a slowdown in the economy and upward before an 

expansion or acceleration. According to BTS research1

, over 

the past three decades the freight TSI led slowdowns in the 

economy by an average of 4–5 months.

The TSI is the broadest monthly measure of U.S. domestic 

transportation services (see box 1) and, as such, provides the 

best available current measure of these services. As an index, 

the TSI (shown in fi gure 1) refl ects real monthly changes in 

freight and passenger transportation services in the United 

States.

Research on the history of the TSI (from 1979 through 2007) 

showed that the freight component of the TSI, which encompasses fi ve modes of transportation (see box 2), demonstrated a strong leading relationship to the economy. When the accelerations and decelerations of the freight TSI are compared 

to the growth cycles of the economy, declines in the freight 

TSI led decelerations in the growth cycle.

1

 See http://www.bts.gov/publications/bts_technical_report/2007 _12_21/

index.html

To determine whether or not the freight TSI turned down before the general economy turned down, BTS based its analysis on the National Bureau of Economic Research (NBER) 

determination that the current recession began in December 

2007.2

 Figure 2 shows the turning points in the freight TSI 

after “smoothing” of the data. To see even more clearly the 

downturn in the freight index relative to the start of the 2007 

recession, fi gure 3 provides only the more recent years of 

data (January 2000 to February 2009) against the December 

2007 recession.

Three potential dates, shown in fi gure 3, could represent the 

point where the freight TSI began to decline: January 2005, 

November 2005, and May 2006. According to the rules 

employed in the original research3

, the peak month would be 

May 2006, approximately 1 1⁄2 years prior to the stated start of 

the current recession. The slowdown in the economy, as measured by the Industrial Production Index, was also dated to 

2

 See http://www.nber.org/cycles/dec2008.pdf.

3

 See “Appendix B: Bry and Boschan Procedure” in U.S. Department 

of Transportation, Research and Innovative Technology Administration, 

Bureau of Transportation Statistics, Transportation Services Index and 

the Economy, TR-002, December 2007.

Figure 1: Transportation Services Index, 

January 1990 – February 2009

January

1990

January

1993

January

1996

January

1999

January

2002

January

2005

January

2008

40

60

80

100

120

140

TSI-freight

TSI-passenger

Index (2000 = 100)

SOURCE: U.S. Department of Transportation, Research and Innovative Technology Administration, Bureau of Transportation Statistics, 

http://www.bts.gov/xml/tsi/src/index.

Box 1. What is the Transportation Services Index?

The TSI is represented by two indexes: freight transportation 

services (freight TSI) and passenger transportation services 

(passenger TSI). The TSI includes only domestic “for-hire” 

transportation operated on behalf of or by a company that 

provides transport services to an external company for a fee. 

Not included in the for-hire population is transportation in 

vehicles owned by private fi rms providing services to those 

fi rms or transportation provided by private individuals (e.g., 

trips in the family car).
BTS Transportation Trends in Focus

2

start in December 2007. As noted in the past research, over a 

three decade period, the freight TSI lead slow-downs by an average of 4 – 5 months, with a range of 1–7 months. Possible 

explanations for the 1 1⁄2 year lead time include the rising cost 

of fuel that occurred in 2005 and 2006 and unique aspects of 

the current recession, such as its magnitude and the housing and fi nancial crisis that preceded it. Figure 4 shows the 

relationship between the freight TSI and monthly average retail 

gasoline prices. The peaks of fuel prices in 2006 appear to 

coincide with the initial downturn in the smoothed freight TSI. 

The research indicates the current recession was preceeded 

by a downturn in the freight TSI, thereby signifying the TSI’s 

usefulness as a leading indicator.

Box 2. Components of the Freight Transportation Services Index

Mode Source Measure

Trucking American Trucking Associations (ATA) Truck tonnage index

Air BTS and carrier websites Revenue freight ton-miles

Rail Association of American Railroads (AAR) Carloads & Intermodal units

Federal Railroad Administration (FRA) Quarterly ton-miles

Water U.S. Army Corps of Engineers (USACE)

Tonnage of inbound 

waterborne trade

Pipeline Energy Information Administration (EIA)

Thousands of barrels of 

pipeline movement

Figure 2: Freight TSI, actual and smoothed, 

July 1979 to February 2009

January

1979

January

1985

January

1991

January

1997

January

2003

January

2009

40

50

60

70

80

90

100

110

120

TSI freight

Index (2000 = 100)

12 month centered

moving average

KEY: TSI = Transportation Services Index

SOURCE: U.S. Department of Transportation, Research and Innovative 

Technology Administration, Bureau of Transportation Statistics, http://

www.bts.gov/xml/tsi/src/index.html and special tabulations as of May 

2009.

Figure 3: Freight TSI, actual and smoothed, 

January 2000 to February 2009

January

2000

January

2001

January

2002

January

2003

January

2004

January

2005

January

2006

January

2007

January

2008

January

2009

90

95

100

105

110

115

TSI freight

12 month centered

moving average

Index (2000 = 100)

Current recession began 

in December 2007, 

according to the NBER

December

2001

January

2005

November

2005

May

2006

KEY: NBER = National Bureau of Economic Research; TSI = Transportation Services Index

SOURCE: U.S. Department of Transportation, Research and Innovative 

Technology Administration, Bureau of Transportation Statistics, http://

www.bts.gov/xml/tsi/src/index.html and special tabulations as of May 

2009.

Figure 4: Freight TSI and Unleaded Regular Gasoline, 

U.S. City Average Retail Price, July 1979 to 

February 2009

January

1979

January

1983

January

1987

January

1991

January

1995

January

1999

January

2003

January

2007

40

50

60

70

80

90

100

110

120

0

50

100

150

200

250

300

350

400

450

Current recession began 

in December 2007, 

according to the NBER

Smoothed freight TSI

Unleaded regular gasoline,

U.S. city average retail price

Index (2000 = 100) Gasoline prices (cents)

KEY: NBER = National Bureau of Economic Research; TSI = Transportation Services Index

SOURCE: U.S. Department of Transportation, Research and Innovative 

Technology Administration, Bureau of Transportation Statistics, http://

www.bts.gov/xml/tsi/src/index.html and U.S. Department of Energy, 

Energy Information Administration, Monthly Energy Report, http://www.

eia.doe.gov/mer/prices.html.