Cass Freight Index report shows multiple signs of an improving freight transportation market
July 07, 2014
Signs of strength in the freight transportation market were apparent in the most recent 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 $23 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.
June freight shipments—at 1.201—were up 6.0 percent annually and were 2.4 percent higher than May en route to its highest level since November 2007, which was slightly ahead of the recession. Shipments remained above the 1.0 mark for the 47th consecutive month. On a year-to-date basis, shipments are up 15.8 percent, with the report noting that shipment gains have been spurred in part due to gains in the construction and manufacturing sectors. And the report cited the recent ISM Manufacturing Report on Business issued last week, which observed that new orders in June headed up 3.5 percent, “indicating that demand for transportation should remain strong for the next several months, [but], despite record new levels of equipment orders, a lack of drivers is restricting growth in truck capacity.”
On the expenditures side, expenditures––at 2.760 in June––were up 12.1 percent compared to June 2013 and 4.2 percent higher than May. June’s expenditures level also stands as a new record high, according to the report and are up 15.6 percent year-to-date.
With rate growth clearly intact, Rosalyn Wilson, senior business analyst with Parsons, and author of the annual CSCMP State of Logistics report, wrote in the Cass report that according to the monthly Cass Truckload Linehaul Index truckload rates have been higher in each month this year, and rail rates have also headed up since the start of the year. She explained that these respective rate increases are pushing up transportation costs with the combination of tight capacity and higher shipment volumes expected to push up rates more quickly throughout the rest of the year.
While the recent GDP revision showed a 2.9 percent contraction, which is the worst GDP reading in five years, and was due in large part to poor winter weather in January and February, coupled with a reduction in healthcare spending due to the Affordable Care Act, and the end of extended unemployment benefits, Wilson wrote that should infer there is a direct correlation between GDP and transportation.
“Despite some talk that the slowing and then contracting economy could signal another recession, the foundation and building blocks for a growing economy are stabilizing and growing,” wrote Wilson.
Other things working on an improving economy’s side, as outlined by Wilson, are: increasing sales of new and existing homes, gains in industrial and government construction over the last several months, and growth in manufacturing for most of the last year.
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