Freight expenditures and shipments up sequentially and down annually, says Cass

Annual declines and sequential gains for freight shipments and expenditures for the month of April were the main themes of the most recent edition of the Cass Freight Index Report from Cass Information Systems released this week.

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.

April freight shipments—at 1.132—were down 2.5 percent annually and up 4.2 percent compared to March, remaining above the 1.0 mark for the 56th consecutive month. The report noted that rail shipments saw significant gains in April, with carload and intermodal traffic up 25.6 percent and 27.6 percent, respectively. And truck shipments were up 1.1 percent in March, which is the most recent data available.

Leading the jump in shipments, according to the report, was a 13.5 percent boost in transportation equipment, coupled with consumer confidence hitting its highest mark in eight years and U.S. imports, paced by consumer goods accounting for more than half of total imports, seeing a 9.1 percent March gain, with more growth expected in the coming months. Cass officials pointed out that that increase in demand is in conjunction with a strong U.S. dollar making foreign goods more attractive as countries like China whose economy is in a downward slide have turned to discounting goods to boost sales.

On the freight expenditures side, April saw a 1.6 percent increase over March, while seeing a 4.7 percent annual decline. Compared to the first four months of 2014, which saw expenditures and shipments up 15.6 percent and 15.8 percent, respectively, Cass said 2015 has not followed suite, with freight spending growing more slowly than shipments, translating to a lack of meaningful rate growth during that period. This was supported by the fact that spot rates in April were close to or below contract rates, coupled with a drop in fuel prices diminishing fuel surcharges and resulting in lower rates.

Rosalyn Wilson, senior business analyst with Parsons, and author of the annual CSCMP State of Logistics report and contributor to the Cass report, wrote in the report that like previous first quarters over the last five years, save for 2014, the economy was slow out of the gate.

“Growth is expected to continue and pick up throughout the rest of the year. Manufacturing should perk up in the coming months as demand increases,” Wilson wrote. “With the strong dollar, raw material prices are lower for imported materials. Although capacity is not a problem, many companies have already announced increased levels of capital investment to update and improve plant and equipment.  Although construction spending slipped in March, first quarter 2015 spending is 3.2 percent higher than the same period a year ago. Drops in drilling and energy exploration accounted for a significant portion of the drop in non-residential construction. With warmer months ahead, construction should pick up steam. The global economic picture is not as strong as the U.S. picture, so exports will continue to be weak.”

A brighter U.S. outlook has been a common theme in the freight transportation and supply chain sectors, despite relatively ordinary macroeconomic indicators. Industry experts have told LM that part of that is due to increasing e-commerce traction, and still-decent manufacturing growth, and relatively solid jobs numbers, although April’s jobs report was lower than expected.