Slight sequential decreases and decent annual increases were evident in the November edition of the Cass Freight Index report from Cass Information Systems released last night.
The slight sequential fall off for shipments and expenditures was not unexpected, the report noted, considering that retailers stocked up earlier than usual due to West Coast port congestion issues being caused in large part by increased demand and port labor negotiations between the Pacific Maritime Association (PMA) and the International Longshore Warehouse Union. And Cass also observed that November is typically a slower freight month, coupled with the fact that in recent years the drops from October to November have been “dramatic,” explaining that the 2014 drop off “is an encouraging improvement that is helping to cap off a good year for freight.”
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.
November freight shipments—at 1.151—were up 4.2 percent annually and down 0.2 percent compared to October. Shipments remained above the 1.0 mark for the 51st consecutive month.
Cass said that this marks the third decrease going back to August but does not represent a major cause for concern, explaining that the reason for that is November represents the highest shipment level going back to the Great Recession.
What’s more, it explained that inventory levels are still high, with many retail shippers having placed early orders to avoid what it said were “expected” transportation problems related to port and truck capacity. Other factors cited in sequential shipment declines in the report included: delayed deliveries of three weeks or longer out of West Coast ports, labor issues, chassis shortages and inefficient chassis distribution, larger TEU ships, and rail capacity issues, among other challenges.
Expenditures––at 2.65 in November––were up 5.0 percent annually and down 0.7 percent from October, which essentially “mirrored” the sequential shipment decline, the report noted.
Still-declining diesel prices, Cass said, are continuing to impact freight rates, and, in turn, mitigating recent freight rate increases rolled out by carriers. And the report added that November expenditures are in close range to June’s record high, while capacity was not as tight in most facets of the supply chain, save for port-related traffic, which saw spot prices decline.
“The first eleven months of 2014 have shown this to be the best year for freight that we have experienced since the recession,” wrote Rosalyn Wilson, senior business analyst with Parsons, and author of the annual CSCMP State of Logistics report and contributor to the Cass report, in the report. “Freight volumes are up and costs to move that freight are also trending up. This is good news for the nation’s carriers on spite of the headwinds being battled (port congestion, throughput capacity, and port labor problems). The congestion situation has not improved at West Coast ports and will probably take the remainder of the year to clear out.”
Wilson added that this winter’s weather forecast does not appear to be better than last year, which wreaked havoc on freight transportation and logistics operations, and could leave the transportation system dealing with the same problems that railroads dealt with especially in the Northwest last year.
And in regards to the holiday season this year, she explained it is too early to too how things will go, but she did observe that consumers are making more purchases for both goods and services, while consumer and business confidence are at their highest levels in years.
“Unlike the last six years, the fourth quarter of 2014 is not going to show a precipitous slide downward, only the normal seasonal slowdown we experienced in the years prior to the recession. 2014 will prove to be the banner year that was predicted and 2015 should be looking at a strong start.”