Cass Freight Index is down for first time in five months
Shipments and expenditures are both down, and other freight indices are showing some recent slippage
in the NewsDorner expands internationalreach with acquisition of Mexico-based Sautem Material Handling Education Foundation establishes Willard P. Heddles Memorial Scholarship Fund Unlock the Value of Your Supply Chain Through Embedded Analytics Freightos report takes deep dive into the ‘digitization’ of freight forwarding Making the Case: A Modern-Day Transportation Management System More News
Following four straight months of sequential growth, the Cass Information Systems Freight Index declined in July.
The Index, which measures the number of shipments and expenditures that are processed through Cass’s account payable systems, indicated that July shipments at 1.011 were 8.6 percent lower than June shipments and 6.7 percent higher than July 2009. While shipments were down for the first time in five months, shipments remained above 1.0 for the third straight month. May marked the first time that shipments were above 1.0 since November 2008.
July’s shipment expenditures at 1.832 were 4.5 percent lower than June’s 1.919, and were 18.6 percent better than July 2009’s 1.491.
Many trucking industry executives and analysts consider the Cass Freight Index as an accurate barometer of freight volumes and market conditions, with Credit Suisse analyst Chris Ceraso stating in research notes 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.
One thing in common that the most recent Cass Freight Index and the ATA tonnage index have in their most recent editions is that shipment and tonnage levels, respectively, are down. These findings are in sync with other recent economic reports that the economic is slowing down after a promising first half of 2009.
Among the recent economic indicators are recent reports from the Department of Commerce, which noted new orders for manufactured goods decreased 1.2 percent in June to $406.4 billion, and shipments declined 0.8 percent to $411.2 billion, and new orders for manufactured durable goods in June 2010 fell 1.0 percent, to $190.5 billion and inventories rose 0.9 percent in June.
What’s more, the Institute of Supply Management reported yesterday that its manufacturing index, also known as the PMI, has declined for three straight months, although it remains above 50 percent which indicates the economy is growing.
Charles W. “Chuck” Clowdis, Managing Director, Transportation Advisory Services, at IHS Global Insight, told LM that it appears the inventory replenishment phase has passed and the economy has been sluggish also, coupled with the fact that consequently, tonnage and revenue gains have slowed likewise.
“Full recovery appears further out than we had previously hoped,” said Clowdis. “In my opinion, the unemployment rate continues to keep consumer spending low-not only by those unemployed obviously, but making employed individuals even more cautious about spending.”
And while year-over-year numbers may continue to mildly improve, compared to 2005-2006, the economy has a ways to go yet, according to Clowdis. And shippers, he said are bracing for rate increases. But the best news for them is that as recovery slows, the increases requested by transport providers will not be as large as they may have been with lessened capacity and rising fuel costs.”
Even though industry conditions may appear to be losing traction, a trucking industry executive whom declined to be identified said his company continues to see demand holding up relatively well.
“Shippers are clearly interested in securing capacity,” he said. “They’re taking steps to ensure they have the resources they need from their key carriers, particularly as we approach the higher-volume seasonal shipping months.”
About the AuthorJeff 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!
Transportation Trends and Best Practices: The Battle for the Last Mile 2017 Technology Roundtable: Are we closer to “Intelligent” Logistics? View More From this Issue