Subscribe to our free, weekly email newsletter!


Even with promising signs, Cass Freight report points to an up and down market in June

By Jeff Berman, Group News Editor
July 03, 2013

While an economic recovery may not truly be in full gear, the transportation sector—to a degree—at least showed some promising signs, according to the June 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 1.133—were down 1.5 percent compared to June 2012 and up 0.09 percent compared to May, with June being the 35th consecutive month shipments topped the 1.0 mark since May 2010, when shipments moved above the 1.0 mark for the first time since November 2008.

Freight expenditures—at 2.463—were down 0.8 percent annually and up 3.4 percent compared to May.

The report observed how the transportation sector continues to follow the up and down track it has been on for the last 2.5 years, while the economy in general has exhibited more favorable trends in the last month, with perhaps the two biggest ones being continued gains being made in the housing and the automotive sectors.

These trends, which also include May and June gains in construction spending, factory orders (for durable goods), and consumer confidence, the report explained, could serve as a catalyst for the economy and bolster the transportation sector in the coming months.

With shipments showing relatively slight gains annually and sequentially, Rosalyn Wilson, senior business analyst with Delcan Corporation and author of the annual CSCMP State of Logistics report, wrote in her analysis of the report that June 2013 shipments represent the lowest level for the month of June over the last three years, but on a year-to-date basis shipments are up 5.8 percent compared to the first six months of 2012, with the disclaimer that second quarter growth was much slower than first quarter growth.

On the railroad side, Cass reported that carloads and intermodal were down 0.7 percent and 1.1 percent, respectively, while the trucking sector still has high utilization rates and increasing load size.

Wilson said that the increases on the expenditure side are related to heavier loadings and the commodity mix rather than an upward trend in rates, with carriers in all sectors reporting strong downward pressure on rates.

The new motor carries Hours-of-Service rules that took effect on July 1 “will have the immediate effect of reducing the productivity of existing capacity by an average of 5 percent,” she wrote, adding that when it happens “the initial beneficiary will be intermodal loadings,” explaining that as trucking rates go up, so will rates for other competitive modes like intermodal.

“Despite the fact that the economy, both domestically and globally, shows no real signs of change other than more of the up and down movements we’ve been watching for close to three years, the transportation sector should experience some noticeable trends,” Wilson wrote. “These trends will probably be of the wobbly nature we have become accustomed to, but more pronounced. The impact of the new HOS rules will be felt in all sectors of the economy, as virtually all products are moved on a truck at some point.”

Many industry stakeholders have said in recent months that while business conditions on some levels are promising, there still remain more questions than answers.

Some have maintained that in regards to the general economy there is still a cautiously optimistic feeling, replete with uncertainty, at a time when the global economy is still ailing. Another common theme has been that things on the economic front don’t appear to be getting better or worse. 

About the Author

Jeff Berman headshot
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. .(JavaScript must be enabled to view this email address).


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!

Recent Entries

Even though China’s costs have risen and the U.S. has now surpassed Mexico as the preferred locale for relocating offshored manufacturing, advantages can be fleeting and the challenges great

Memphis-based FedEx reported solid fiscal second quarter earnings results today. Quarterly net income of $616 million was up 23 percent annually, and revenue, at $11.9 billion, was up 5 percent. Operating income at $1.01 billion was up 22 percent.

UPS said this week that it has added significant space to some of its North America-based distribution facilities, which the company increases the total size of its supply chain solutions network size by roughly 1.2 million square-feet. The company’s total global supply chain solutions network is comprised of 596 facilities and about 32.8 million square-feet. UPS offers various services at these facilities, including: warehousing and fulfillment inventory, transportation and returns management; custom kitting and packaging; and store-ready displays.

A week ago, the average price per gallon of diesel gasoline saw its steepest decline in more than two years, when it fell 7 cents to $3.535. This week took that decline a step further, with the Department of Energy’s Energy Information Administration (EIA) reporting that the average price this week fell 11.6 cents to $3.419 per gallon.

With an eye on further expansion of its e-commerce business and related reverse logistics processes, transportation and logistics bellwether FedEx last night announced it has inked an agreement to acquire Pittsburgh-based GENCO, a third-party logistics (3PL) services provider specializing in product lifecycle and reverse logistics.

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2013 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA