Cass Freight Index report data bodes well for remainder of 2014

Even with mixed sequential results, data from the Cass Freight Index Report from Cass Information Systems is pointing to a decent home stretch and overall all year for 2014 freight activity.

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.

September freight shipments—at 1.164—were up 0.7 percent annually and down 1.4 percent compared to August. Shipments remained above the 1.0 mark for the 49th consecutive month.

The report explained that various freight indicators have shown a steady increase in shipment weights, with the thesis that a decrease in the actual number of shipments does not specifically translate into a falling off of freight activity. And it added that as has been the case in most summers, the economy “cooled down” in August and September.

Cass also said that the number of freight waybills has increased by 12.2 percent since the end of 2013, with orders to U.S.-based factories down 10.1 percent in August, which is the largest decline on record, according to data from the U.S. Department of Commerce, and essentially erased a 10.5 percent increase in July. It also cited the Institute of Supply Management’s Manufacturing Report on Business’s key metric, known as the PMI, heading down 4.1 percent in September while still showing growth. Cass said this decline was due to a recent drop in global demand and the relative strength of the U.S. dollar that in turn makes U.S. goods more costly abroad.

And based on manufacturing growth rebounding from August to September, Cass said it does not expect a “dramatic fall-off in freight as we experienced in the final months of last year.” 

Expenditures––at 2.666 in September––were up 3.5 percent annually and up 0.8 percent from August.

Cass said these expenditure gains are largely based on tonnage gains, while diesel prices have been down extensively since March and subsequently lessened fuel surcharges and helped to keep total freight movement-related expenditures down. Freight expenditures are up 11.7 percent compared to December 2013, and Cass said it expects a leveling off for freight shipment levels and more steady rates during the fourth quarter.

At last month’s CSCMP Annual Conference, Rosalyn Wilson, senior business analyst with Parsons, and author of the annual CSCMP State of Logistics report and contributor to the Cass report said that expenditures represent freight spend, as opposed to rates. Over the last four or five years, she said that since coming out of the recession, more money is being spent on freight expenditures, while the number of shipments has not risen in tandem with the amount of money spent.

“That is not because rates are going up,” she said. “It is because volume per shipment has increased dramatically. We are starting to fill our trucks more. When you look at the American Trucking Association’s monthly truck tonnage volume data, you will see it is not exactly following the same curve as Cass is in terms of the number of shipments, and that is because there are heavier volumes.”

Wilson wrote in the Cass report that this year is the strongest year for the freight sector since the end of the recession.

“While there are still headwinds, things should continue to improve for the industry,” she wrote. “The rise in costs, especially related to labor, are pressing hard on rates and should break through in early 2015. The volume growth that has supported that strengthening in freight is still fragile and susceptible to outside forces. Consumers, the missing key for recovery, are getting back in to the game. Consumer confidence, and, more importantly, consumer spending have been on the rise along with household income. A good holiday season would be a big boost for the end of the year.”