Cass Freight Index sees return to growth in August
Despite uptick, experts note trucking market remains fragile
in the NewsState of Logistics 2016: Pursue mutual benefit California exports sustain traction UniCarriers Americas sponsors local high school event to promote interest in STEM careers Safe Fleet acquires Randall Manufacturing U.S. carload and intermodal shipments are mixed for week ending January 14 reports AAR More News
Coming off of July, which saw its first decrease in five months in conjunction with other indices declining, the Cass Information Systems Freight Index switched back to growth mode in August.
The Index, which measures the number of shipments and expenditures that are processed through Cass’s account payable systems, indicated that August shipments at 1.095 were 8.4 percent higher than July’s 1.011. Shipments in August remained above the 1.0 mark for the fourth straight month, with May marking the first time shipments topped 1.0 since November 2008. August shipments were
August’s shipment expenditures at 1.971 were 13.2 percent higher than July’s 1.832 and were 4.94 percent higher than August 2009’s 1.477.
Many trucking industry executives and analysts consider the Cass Freight Index as an accurate barometer of freight volumes and market conditions, with Credit Suisse analyst Chris Ceraso stating in research notes 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 ATA’s tonnage index for July saw gains on a seasonally-adjusted and not-seasonally adjusted basis were up year-over-year, but both indices have been up and down throughout the course of 2010. And many economists are pointing to economic indicators like sluggish consumer spending, high unemployment, and weak GDP growth as signs that the economy has a ways to go before it is back to full strength.
Even though the August Cass Freight Index saw a return to growth, it is clear that the trucking sector is still driving on a bumpy road.
“What these [Cass] numbers are showing is identical to what we are seeing,” said Mike Regan, President and CEO of TranzAct Technologies and frequent blogger for LM. “We saw the decline starting at the end of June running through the first couple weeks of July. In normal economic times, you would compare year-over-year data, because July is historically a weak month, with plants shutting down and other things. When we saw the volume drop at the end of June…that was not surprising. The magnitude of the drop was a little but revealing. The uptick in August was consistent with the Cass Freight Index.”
While trucking volumes are not necessarily bobbing along the bottom, Regan explained the economy is still very fragile. Economic activity over the first two quarters of this year was driven by inventory restocking, which led to a moderation in freight levels, said Regan. But, the trucking market at this point is still weak, he said.
On an anecdotal basis, Regan recalled a recent conversation he had with a flatbed carrier that had eight calls for every piece of available equipment but in July the number of calls fell from eight to two.
“What is really stunning about this is…it is almost as is American manufacturers have the ability turn an ‘on and off’ shipping button somewhere in their companies, and they can turn it on or off with relative ease,” said Regan.
Not surprisingly—at the same time—many manufacturers are running extraordinarily lean inventories at the moment and cannot afford to do it any other way.
Charles W. “Chuck” Clowdis, Managing Director, Transportation Advisory Services, at IHS Global Insight, told LM in a recent interview that it appears the inventory replenishment phase has passed and the economy has been sluggish also, coupled with the fact that consequently, tonnage and revenue gains have slowed likewise.
“Full recovery appears further out than we had previously hoped,” said Clowdis. “In my opinion, the unemployment rate continues to keep consumer spending low-not only by those unemployed obviously, but making employed individuals even more cautious about spending.”
About the AuthorJeff 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!
Moore on Pricing: The other TMS functional options 2017 Rate Outlook: Where are freight transportation rates headed? View More From this Issue