Cass Freight report tells ongoing story of mixed economic signals
December 06, 2013
The trend of bumpy end-of-the-year economic activity remained intact in November, 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 1.105—were down 1.0 percent compared to October and were up 1.1 percent compared to November 2012. Despite declining in November, shipments have remained above the 1.0 mark for 40 consecutive months since May 2010, when shipments moved above the 1.0 mark for the first time since November 2008.
“The decline in shipments was not unexpected as this is the same weak year-end environment we have observed for the last three years,” 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, adding that “stronger than expected manufacturing activity and shipments of seasonal goods offset a general slowing of freight movements to temper the drop in shipment levels.”
Wilson added that the 1.1 percent shipment decline is better than October’s 3.5 percent fall off, adding that the Institute for Supply Management’s Manufacturing report Production PMI saw a 3.3 percent jump in November due in large part to export production, with export goods shipments and the seasonal jump in food and beverage shipments not strong enough to overcome the drop in shipments for things like apparel, appliances, and electronics.
The report stated that November freight expenditures were up 0.6 percent compared to October and were up 7.8 percent compared to November 2012. Wilson said the slight sequential rise can likely be attributed to a surge in spot market rates in the last two weeks of November, citing data from TransCore which noted end of month spot market activity was solid for van and flatbed loads and subsequently upped average rates up 2 cents per mile.
“We’re seeing mixed economic signals as we approach the end of the year. Many indicators have improved during the last several months, including new home sales, new jobs, new export orders, and manufacturing production, new orders and backlog,” wrote Wilson. Exports rose in recent months, but largely based on the strength of oil product exports. Container exports and imports, largely aimed at the consumer market, have trended downward. Despite the better than expected third quarter GDP, the fourth quarter will not be as strong. December is likely to provide a weak finish to a relatively weak 2013 for the freight industry.”
Sentiment from shippers and carriers is in line with Wilson’s assessment, as a flattish overall economy is continuing a sort of “more of the same” environment for carriers and logistics services providers.
A truckload carrier told LM that market conditions appear to be in a holding pattern, with the caveat that things could improve closer to the middle of 2015.
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