December Cass Freight Index report shows continued signs of improvement

Data for the month of December in the most recent edition of the Cass Freight Index Report from Cass Information Systems suggests that more positive trends, especially as they relate to freight shipments, may be afloat. 

Many freight transportation and logistics 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.

On the freight shipments side, Cass reported that December shipments were up 3.5 percent annually at 1.074, following a slight 0.3 percent decline in November, and October’s 2.7 percent gain, which marked the first time it headed up in the previous 20 months.

With mostly positive shipment traction intact during the fourth quarter, the report said it is the beginning of a more positive trend, paced by:

• continued growth in parcel and airfreight driven bye-commerce; and
• a sequential improvement in truck tonnage;
• less bad rail and barge volume over all

And it added that this data suggests that consumers are starting to spend more, coupled with the recent surge in crude oil prices the industrial economy’s rate of deceleration has eased. 

Even though shipments fell 1.2 percent from November to December, it did not raise a major cause for concern, due to what the report called some normal seasonality at work, adding that reports of stronger shipments across all modes put shipment growth in a better spot than it was at the same time from 2013-2015.

“If the winter of the over all freight recession we’ve been in for more than a year and a half in the U.S. is not over yet, it is certainly showing promising signs of thawing,” wrote Donald Broughton, the report’s author and transportation analyst at Avondale Partners.

December freight expenditures were down 3.0 percent annually at 2.274 and off 1.1 percent compared to November.

Although expenditures were down, the report noted that the rates of contraction in November and December were not as steep as they were from May through August. Broughton attributed this to being a result of the steady increase in the price of fuel over the last six months, as well as improvements in shippers’ trucking and intermodal pricing power.

The analyst also stressed at as a fundamental rule of marketplaces volume leads growth.

“Repeatedly we have watched in a host of different markets, volume goes up before pricing starts to improve and volume goes down before pricing starts to weaken,” he wrote. “Even in markets as basic as the weather, the number of hours of sunshine (start to decline) falls long before the temperature starts to fall.”