Freight shipments and expenditures falter down stretch in Q1, reports Cass

Freight transportation shipments and expenditures finished the first quarter in declining fashion, according to the most recent edition of the Cass Freight Index Report from Cass Information Systems.

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.

March shipments did not keep pace with February rising 1.4 percent sequentially compared to an 8.3 percent jump from January to February. On an annual basis, shipments were down 1.5 percent. The report said that shipments in March have trailed February in recent years, adding that March shipments are 6.2 percent below last December, making it clear that the steep shipment decline in January will need more time to recover from. Total first quarter shipments were down 3 percent annually.

Cass said that recent sequential gains in the Institute for Supply Management’s manufacturing data may portend growth for shipments, with its key benchmark, the PMI, topping the 50 mark for the first time since August 2015 and having grown for three months straight, while high inventories still remain a concern, although new orders and backlog of orders are also growing. Looking ahead, the report said it expects sluggish but sustained freight growth.

On the expenditures side, March freight payments dropped 1.0 percent to 2.287 from February, and were down 7 percent compared to March 2015. The 1.0 percent came on the heels of a strong 6.3 percent February increase, which Cass said is a departure from past years in March.

Spot rates were flat or down in March, given looser capacity across the modes tracked by Cass. And trucking rates have been moderate, with most shippers not expecting a major change for the first half of the year, with a still slow economic growth environment not a driver for rate increases. As for railroads it added that while railroads called for rate hikes often in 2015, which matched their need for services, they have been slower to do so in 2016.

By some measures the economy appears to be in good shape, wrote Rosalyn Wilson, founder and president of FreightMatters, in the report, citing strong employment growth in March, gains in hourly wages, and moderate growth in housing starts and home sales, and low inflation.

Conversely, though, she pointed to still-sluggish consumer spending, weak business investment, a slight gain in unemployment, and a strong U.S. dollar negatively impacting U.S. export prices, among various concerns.

“Global economic conditions are still weak and fragile in some economies, adding a level of uncertainty to the U.S. economy,” she wrote. “2016 is turning out to be difficult to predict. Anecdotally, however, many players in the supply chain remain cautiously optimistic for the rest of the year.”

That cautious optimism remains true to its meaning, with many transportation and supply chain stakeholders keeping an eye on things like high inventories, a slow rebound in gas prices, and shaky consumer confidence levels, which many Wall Street analysts maintain is a less than reliable metric.

And some industry stakeholders contend that the economy is underperforming the numbers, with demand lacking, weak GDP growth, and general uncertainty.