Despite dip from June, Cass report says freight transportation market conditions are solid

Coming off of a particularly strong June, freight transportation market conditions tapered off somewhat in July, according to the most recent edition of the Cass Freight Index Report from Cass Information Systems that was issued this week.

By ·

Coming off of a particularly strong June, freight transportation market conditions tapered off somewhat in July, according to the most recent edition of the Cass Freight Index Report from Cass Information Systems that was issued this week.

The Cass Freight Index accurately measures trends in North American shipping activity based on $23 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.

July freight shipments—at 1.154—were up 4.2 percent annually and down 3.9 percent compared to June’s 1.201, which is the highest level for shipments since November 2007, which was slightly ahead of the recession. Shipments remained above the 1.0 mark for the 47th consecutive month. But July saw a stretch of five months of annual shipment gains snapped.

The report observed that a slight decrease in the Institute for Supply Management’s July manufacturing data had an effect on July shipments, despite seeing a nearly 8 percent gain in new orders. And it added that carload, intermodal, and trucking volumes for the month were mixed and cited anecdotal evidence pointing to a lackluster month for shipments.

Expenditures––at 2.651 in July––were up 6.7 percent annually and down 3.9 percent from June, which hit a record high of 2.760.

Rosalyn Wilson, senior business analyst with Parsons, and author of the annual CSCMP State of Logistics report, wrote in the Cass report that there was not a material change in rates in July, due to the fact that capacity loosened with the decrease in shipments. And she added that in recent weeks, less-than-truckload (LTL) carriers have noted that pricing is improving, which potentially portends that industry-wide rate hikes could be coming.

Despite the sequential declines in both shipments and expenditures in July, Wilson said that they are essentially following a seasonal trend and are consistent with drops for the same period in recent years and should not be “seen at the start of a decline in freight for the second half of 2014.”

Taking that a step further, Wilson noted that even before the recession summer freight activity was slower before the seasonal holiday increase, with retailers having higher inventories and exercising caution about the orders they are placing for new stock. She also said that gains in Chinese export orders and ongoing positive momentum in U.S. manufacturing bode well for freight shipment activity through the end of 2014.

“Corporate profits are strong, while consumer sentiment and household wealth are rising, putting both groups in a position to spend more this year,” wrote Wilson.

From an industry perspective, Tom Nightingale, president, transportation logistics, for Genco, a Pittsburgh-based 3PL, said that he is seeing very similar market conditions that are consistent with Cass’s findings.

“We are seeing ongoing strength in the market, with normal seasonality patterns, as we expected, in July,” he said. “But we still see the asset-based carriers emboldened and taking fairly aggressive price increases, and we see our customers––and potential customers¬¬––coming to us looking to secure capacity for Peak Season. And we have seen a lot of concern from shippers about their ability to secure long-term, reliable capacity at reasonable rates and trying to mitigate potential price increases by going out to bid more and more frequently. The driver shortage situation and the costs of signing bonuses by carriers for new drivers is being passed through in the form of rate increases.”


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
B2B Sellers Prefer a Unified Approach for Ecommerce
A new study from Forrester Consulting, commissioned by NetSuite, found that many midmarket, B2B sellers say their ecommerce solutions have contributed to their growth in sales, new customer acquisitions and improved customer relationships.
Download Today!
From the August 2016 Issue
A growing number of low-cost lift trucks offer new avenues for pairing equipment and applications, but less cautious buyers might find that small up-front costs come at a steep price. Selecting the proper lift truck, lift truck tips 2016, Choosing the right Lift Truck
Megatrends in ocean freight
Ocean Cargo Roundtable: What’s in store for 2017?
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...