January Cass Freight Index is up annually and down sequentially

Freight activity in January showed mixed growth on an annual basis and was basically flat annually, according to the most recent edition of the Cass Freight Index.

This 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.

January shipments at 1.046 were down .95 percent compared to December and up 3.6 percent compared to January 2010. This marked the 20th 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 2.269 were down .13 percent compared to December and up 22.1 percent compared to January 2011. Cass officials said that the annual comparison is misleading, though, as January 2011 was the lowest monthly expenditure level for the index in the last 18 months.

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.

In her analysis of the January data, 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, explained that freight expenditures have leveled off in recent months as the reduced shipment volume took pressure off of capacity and rates stabilized.

“Total freight spend has been relatively flat over the last several months, mirroring shipment volume, indicating that the rate increases that were prevalent for most of 2011 have slowed too,” wrote Wilson.

And even though various fourth quarter economic indicators—like GDP growing to 2.8 percent from 1.8 percent in the third quarter, increasing consumer confidence to its highest level in almost a year, a slowly declining unemployment rate, solid manufacturing growth, and the National Retail Federation calling for 2012 retail sales to be up 3.4 percent—were promising, Wilson said that has yet to translate in a growth in freight shipments. But she added should these trends continue, they could lead to an increase in freight shipments by March.

Even with the lack of a material gain in freight activity, shippers and carriers continue to tell LM that overall conditions are stable, with the potential for an uptick in 2012, due in part to tight capacity and pricing power to a large degree.

Morgan Stanley analyst William Greene wrote in a research note that following an improvement in trends versus normal seasonality recently, January’s data is strong

“It’s not uncommon for the month following a particularly strong Cass result to register weakness vs. seasonality as the prior month’s strength creates a tough sequential comparison,” wrote Greene. “Within this context, January’s shipment index result, which was inline with seasonality, represents a continuation of December’s strength. With that said, we suspect that volume expectations across trucking have likely been revised higher in the wake of largely positive volume commentary from TL and LTL carriers which recently reported earnings. Moreover, January benefitted from seasonally milder winter weather.”