Cass Freight Index highlights strong August shipments and expenditures output

The good times for the freight transportation sector kept rolling in August based on data in the most recent edition of the Cass Freight Index Report issued this week by Cass Information Systems.

Many freight transportation and logistics 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.

“The Cass Freight Shipments and Expenditures Indexes are clearly signaling that the U.S. economy, at least for now, is ignoring all the angst coming out of Washington D.C. about the trade wars,” wrote the report’s author Donald Broughton, founder of Broughton Capital. “Despite Wall Street’s concerns about the increased threat of inflation or interest rates hikes, these indexes are displaying accelerating strength on top of increasingly difficult comparisons. Demand is exceeding capacity in most modes of transportation by a significant margin. In turn, pricing power has erupted in those modes to levels that continue to spark overall inflationary concerns in the broader economy.”

Through August, the most recent month for which data is available, freight shipments and expenditures have now seen annual gains for 19 and 22 months, respectively, the report said. And it added that the current level of volume and pricing growth is signaling that the U.S. economy is growing, but that level of growth may have reached its short-term expansion limit.

What’s more, addressing tight market capacity, the report said that there is confidence that the increased spending on equipment, technology, and people will lead to increased capacity in most modes, with many modes indicating there are “limited amounts of capacity or even no capacity at any price shippers are willing to pay.”

August freight shipments, at 1.227, rose 6% annually and were off 1.4% compared to July.

Broughton said this annual gain serves as a key data point in confirming the continuing strength of the U.S. economy. And he added that the first eight months of 2018 have clearly signaled that, barring a negative ‘shock event’, 2018 will be an extraordinarily strong year for transportation and the economy. What’s more, he noted that March through August exceeded all levels attained in all months in 2014 (a very strong year), while February was roughly equal to the peak month in 2014.

August freight expenditures, at 2.917, increased 16.7% annually and were up 0.6% compared to July.

Broughton wrote that on a nominal basis the expenditures index has now topped the all-time high from June 2014, with the expectation that it “appears poised to stay at record levels with ease in the coming months.”