August 2012 Cass Freight Index shows slippage in shipment volume and rates

Shipments and expenditures are each down 1.1 percent from July.

By ·

Economic slippage is still prevalent in the freight economy based on data in the August edition of the Cass Freight Index Report from Cass Information Systems.

The Cass Freight Index accurately measures trends in North American shipping activity based on $20 billion in paid freight expenses of roughly 350 of America’s largest shippers, according to Cass officials.

As LM has reported, many trucking industry executives and analysts consider the Cass Freight Index to be the most accurate barometer of freight volumes and market conditions, with many analysts noting that the Cass Freight Index sometimes leads the American Trucking Associations (ATA) tonnage index at turning points, which lends to the value of the Cass Freight Index.

August freight shipments and expenditures were mostly down sequentially and annually.

Shipments at 1.130 were down 1.1 percent compared to July and down 1.1 percent compared to August 2011. This represents the 27th consecutive month shipments were above the 1.0 mark since May 2010, when shipments moved above the 1.0 mark for the first time since November 2008.

Expenditures at 2.368 were down 1.1 percent compared to July and up 3.8 percent compared to August 2011.

Cass officials said in the report that the decline in shipments marks the third time in 2012 that shipments have been down annually, adding that freight volumes were up 9.9 percent during the first half of the year, but has subsequently slipped to 8 percent through August, due to contraction in July and August.

The firm added that there are various reasons for shipment volumes slowing down, including how inventories are building beyond the levels needed to support expected sales, coupled with retailers and manufacturers pulling back on restocking. Other factors contributing to depressed shipment levels, as outlined in the report, include global orders being in steady decline, the Chinese Manufacturing Index falling in eight of the last ten months and export orders in August dropping at their steepest level since March 2009, and three straight months of declines in manufacturing output based on Institute for Supply Management data, which is also seeing a drop-off in new order activity.

On the expenditures front, Cass said that to a large degree rates were largely unchanged in August although they are up 4.4 percent year-to-date through August. The report noted that tight capacity in some parts of the country, due to a lack of equipment and a driver shortage, and driver pay is increasing faster than rates are, suggesting that these increased costs are yet to be passed through. The firm expects rates to “hold firm at current levels” or possibly increase as capacity continues to tighten and carriers face high labor and fuel costs.

“Building inventories, declining new orders and backlogs, and falling consumer and business confidence in short-term economic growth are all pointing to a flat to declining freight market in the coming months,” the report stated. “Uncertainty regarding taxes, as well as other issues that hinge on this year’s election, has bred a sense of uneasiness and unwillingness to move forward.”

Charles W. “Chuck” Clowdis, Jr., Managing Director-Transportation Advisory Services, at IHS Global Insight told LM there are multiple reasons for the travails facing the freight transportation sector and consumer-based economy.

“Our opinion is that a combination of reduced ‘back-to-school’ spending coupled with continuing consumer concern about unemployment or under employment is taking its toll on spending and slowing an already slow recovery,” he said.  “Additionally, while motor carriers have been increasing Driver wages, the major cost element in truck rate making, this has not fully been passed along in rate increases. As diesel prices rise, trucking costs will also and eventually make their way into the price of consumer goods.”


About the Author

Jeff Berman, Group News Editor
Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. Contact Jeff Berman

Subscribe to Logistics Management Magazine!

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your entire logistics operation.
Start your FREE subscription today!

Latest Whitepaper
SaaS Supply Chain Management Systems
A guide to better understanding the market, the software and the benefits
Download Today!
From the November 2016 Issue
The third time is the charm for this U.S. manufacturer on the hunt for a third-party logistics (3PL) provider that could successfully combine transportation services and technology capabilities under one roof.
Warehouse & DC Operations Survey: Ready to confront complexity
2016 Quest for Quality Awards Dinner
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
Digital Evolution: Streamlining Logistics and Supply Chain Operations
In this FREE virtual conference we'll define the challenges facing operations and offer solutions designed to create dynamic, automated networks that offer seamless communication, improved collaborative third-party relationships, and the ability to respond to changes at a moment's notice.
Register Today!
EDITORS' PICKS
Logistics Management’s Top Logistics News Stories 2016
From mergers and acquisitions to regulation changes, Logistics Management has compiled the most...
Making the TMS Decision: Ariens Finds Just the Right Fit
The third time is the charm for this U.S. manufacturer on the hunt for a third-party logistics (3PL)...

Motor Carrier Regulations Update: Caught in a Trap
The fed is hitting truckers with a barrage of costly regulations in an era of scant profits....
25th Annual Masters of Logistics
Indecision revolving around three complex supply chain elements—transportation, technology and...