Cass Freight Index Report tells story of a bumpy freight road in October

Typically viewed as a month in which freight really gets rolling ahead of the holiday shopping rush, October did not show its usual anecdotal evidence of better things ahead, according to the most recent edition of the Cass Freight Index report.

By ·

Typically viewed as a month in which freight really gets rolling ahead of the holiday shopping rush, October did not show its usual anecdotal evidence of better things ahead, according to the most recent edition of the Cass Freight Index report.

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.

Freight shipments—at 1.116—were off 3.5 percent compared to September and were down 2.0 percent compared to October 2012. Even with the decline, shipments have remained above the 1.0 mark for 39 consecutive months since May 2010, when shipments moved above the 1.0 mark for the first time since November 2008. 

The report pointed out that the lower shipment level is “reflective of the weakening state of the overall economy,” with shipment volume already below corresponding 2012 volumes in six months of 2013.

“The sharp reduction in the shipment volume in October can be linked to the government shutdown,” wrote Rosalyn Wilson, senior business analyst with Delcan Corporation and author of the annual CSCMP State of Logistics report, in her analysis of the report.

Wilson said that while Customs and Homeland Security workers were exempt from the shutdown-related furlough, many freight shipments were delayed because other government agencies were not open to perform necessary inspections or processing.

Freight expenditures—at 2.508—were up 0.8 percent annually and down 2.6 percent compared to September.

This marked the largest sequential decline of the year, with expenditures only trending down in two other months in 2013 as well. Wilson wrote that the decrease in expenditures mirrors the drop in shipments and mainly reflects a change in volume, rather than a substantial change in rates.  What’s more, she explained that carriers have found rate increases difficult to sustain throughout the year and October was no exception, with spot market rates falling as the month moved on along with a drop off in posted loads.

Since the government shutdown ended, though, there appears to be a semblance of normalcy from a macro perspective in that market conditions appear to be somewhat steadier albeit in a low-growth environment with balanced capacity.

Looking at fourth quarter growth, Wilson said that “underwhelming” retail sales have resulted in lower expectation for the holiday season, with the National Retail Federation forecasting that the average holiday shopper will spend less 2.5 percent less this year than in 2012 which is the first forecasted decline since 2008.

“[T]he fourth quarter is unlikely to be as strong as initially forecast, with much of the damage already done by the government shutdown and its ripple effects,” wrote Wilson. “A pickup in exports will not be strong enough to offset the expected declines elsewhere in the economy. Ongoing concern, both domestically and abroad, over the lack of a long-term resolution to the federal government’s budget and debt ceiling issues is casting a cloud of uncertainty over economic growth for the remainder of this year and the first quarter of 2014.”


About the Author

Jeff 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!

Latest Whitepaper
5 Catalysts to Outsource Logistics
Today’s consumer-driven retail strategies are making it more difficult than ever to run an efficient, cost-effective supply chain. Consider the following five challenges that supply chain leaders will have to overcome in order to be effective in coming years – and why these challenges are acting as catalysts to engage with third-party logistics providers for supply chain expertise.
Download Today!
From the July 2016 Issue
While it’s currently a shippers market, the authors of this year’s report contend that we’ve entered a “period of transition” that will usher in a realignment of capacity, lower inventories, economic growth and “moderately higher” rates. It’s time to tighten the ties that bind.
2016 State of Logistics: Third-party logistics
2016 State of Logistics: Ocean freight
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
Getting the most out of your 3PL relationship
Join Evan Armstrong, president of Armstrong & Associates, as he explains how creating a balanced portfolio of "Top 50" global and domestic partners can maximize efficiency and mitigate risk.
Register Today!
EDITORS' PICKS
2016 Quest for Quality: Winners Take the Spotlight
Which carriers, third-party logistics providers and U.S. ports have crossed the service-excellence...
Regional ports concentrate on growth and connectivity
With the Panama Canal expansion complete, ocean cargo gateways in the Caribbean are investing to...

Digital Reality Check
Just how close are we to the ideal digital supply network? Not as close as we might like to think....
Top 25 ports: West Coast continues to dominate
The Panama Canal expansion is set for late June and may soon be attracting more inbound vessel calls...