February Cass Freight Index report shows annual and sequential gains

In what its authors described as “the possible reversal of a very long trend,” the February edition of the Cass Freight Index Report showed that the change in shipments from January to February exceeded the monthly change in expenditures.

The Cass Freight Index accurately measures trends in North American shipping activity based on $17 billion in paid freight expenses of more than a hundred 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.

February shipments at 1.072 were up 2.5 percent compared to January and up 3.5 percent compared to February 2011. This marked the 21st consecutive month shipments were above the 1.0 mark since May 2010, when shipments moved above the 1.0 mark for the first time since November 2008.

Expenditures at 2.295 were up 1.2 percent compared to January and up 9.8 percent compared to February 2011. Cass officials said the increase in February shipments reversed the downward trend which had been occurring over the past three months.

They added that the gains in shipments reflect the strength of the manufacturing sector, as evidenced by the Commerce Department’s report that Manufacturers’ Shipments. Inventories, and Orders were up for the third straight month in January, with a 0.4 percent gain.

On the Expenditures side, Rosalyn Wilson, senior business analyst at Delcan Corporation and author of the Annual State of Logistics Report published by the Council of Supply Chain Management Professionals, wrote in her monthly analysis of the report that February’s 9.8 percent annual gain pales compared to January’s 22.1 percent gap, explaining that the gap has been slowly eroding since early 2011 although it has remained ahead of the gap in year-to-year shipments.

“Fuel costs have been rising during 2012, but total spending does not seem to reflect this increase. The conclusion would be that carriers have eased up on base rates to compensate for higher fuel surcharges.”

And while the economy has shown signs of improvement in recent months, Wilson stressed that there is a long way to go before the recovery is complete. Among the reasons she cited were how consumers are still spending a high percentage of paychecks on necessities as food and gas prices rise, as well as more consumers turning to credit, which sparked a ten percent gain in consumer debt from November to January, its highest level in ten years.

What’s more, Wilson explained that there are no clear signs that a fast turnaround for the freight industry can be expected. Instead, she explained that there are several signs of that 2012 may be more reflective of uneven growth, which has been occurring over the last three years.

While shipments outpaced expenditures in February, according to Cass data, it remains to be seen how things will play out in the coming months, especially on the truckload side.

“If the economy continues to expand at a modest pace, capacity shortages should become more frequent and more widespread as few carriers are looking to significantly increase the size of their fleets,” said John Larkin, Stifel Nicolaus analyst. “With more rapid economic expansion, the capacity shortage could become more severe, quickly. Those shippers that had not locked in capacity at a reasonable price might find themselves coping with skyrocketing spot market prices.”