With so much attention given to the difficult winter weather conditions at the end of 2013 and into 2014 and how they impacted freight transportation and logistics operations, it looks like market conditions may be turning the corner headed into spring, according to the most recent edition of the Cass Freight Index Report from Cass Information Systems Inc.
The Cass Freight Index accurately measures trends in North American shipping activity based on $20 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.
The report noted that while bad weather remained an issue in certain parts of the U.S. transportation seemed to be less affected in March than it was in the first two months of the year.
March freight shipments—at 1.144—were up 0.4 percent compared to March 2013 and up 6.6 percent annually, marking the second straight month shipments were up on an annual basis. Shipments remained above the 1.0 mark for the 44th consecutive month, when shipments moved above the 1.0 mark for the first time since November 2008.
Solid manufacturing growth in March helped spurt shipment growth, as did increasing truck traffic over the month, the report noted. And it added that while demand was strong, many of the report’s respondents still were concerned about weather-related problems in certain parts of the country.
“Freight volumes in the first quarter were up 10 percent over Q4 2013, showing the strongest start of the last few years, but it remains to be seen whether the number of shipments will follow the trends of recent years and falter in the second quarter,” wrote Rosalyn Wilson, senior business analyst with Delcan Corporation and author of the annual CSCMP State of Logistics report, in the report.
March expenditures at 2.549 were up 5.3 percent compared to March 2013 and were 5.4 percent ahead of February, with the report observing that expenditures, while up, moved at a slower rate than volumes with most of the increase due to volume gains. The March expenditures tally represents its second-highest mark in the last four years, with overall first quarter freight spend up 6.8 percent compared to the fourth quarter of 2013.
In her analysis of this batch of data, coupled with various other economic indicators, Wilson explained there are things to be optimistic about in terms of future growth, as well as things that need to be monitored, too.
On the positive side are manufacturing and production back in expansion mode, with strong new orders and backlog figures boding well for freight growth, according to Wilson. And an increase in consumer spending, due to the weather-affected impact over most the first quarter could result in consumers spending more due to pent-up demand, as well as an increase in sales of cars and pickup trucks, which Wilson said are “considered a harbinger of recovery in the construction sector” saw growth in March.
Conversely, things to keep an eye on include: rising home prices and interest rates having what Wilson called a dampening effect going forward and employment numbers, which, while showing improvement, still have much room for growth, even though private sector payrolls are at a higher level now than in December 2007, when the Great Recession began.
“All in all, lots of strengthening in the economy, but taking everything into consideration the signals are still mixed,” wrote Wilson. “It will be interesting to see if we can continue to climb up or if we will keep with the trend of recent years and stumble in the second quarter.”
Looking at the first quarter, Stifel Nicolaus analyst John Larkin pointed out various themes that were prevalent and had an effect on volumes and pricing, including: weather artificially tightening supply and demand, with spot rates heading up; weather adversely impacting transportation network efficiency and costs; supply chains out of kilter due to intermittent weather-related plant and warehouse closures; and increased demand in the truckload sector as shippers switched to truck from intermodal on a temporary basis, among others.