Subscribe to our free, weekly email newsletter!


January Cass Freight Index report highlights a slow beginning to 2014

By Jeff Berman, Group News Editor
February 07, 2014

Following a pattern of declines to finish 2013, the January edition of the Cass Freight Index Report from Cass Information Systems Inc. showed a pattern of more of the same, with sequential declines in freight shipments and expenditures from December to January.

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.

January freight shipments—at 1.000—were down 3.6 percent compared to December, which represents the fourth straight monthly decline. Shipments were down 2.0 percent compared to January 2013. Even with the decline, shipments remained above the 1.0 mark for the 42nd consecutive month, when shipments moved above the 1.0 mark for the first time since November 2008. 

The report explained that even with GDP improving in the second half of 2013, that growth has not carried over into freight volumes, coupled with the fact that weather was an issue for production and deliveries as well.

Rosalyn Wilson, senior business analyst with Delcan Corporation and author of the annual CSCMP State of Logistics report, noted in the report that January as usual saw a post-holiday drop along with traditionally being the slowest month of the year, with volumes typically rising in the spring, flattening or dropping in the summer, peaking in August and September, and then dropping to levels last seen at the beginning of the year.

“This year begins the same, with January shipment levels the lowest since 2010,” Wilson wrote. “Railroad carload and intermodal loadings-good barometers of the volume of freight moving-have trended down in the last three months. Snowy January weathers contributed to the depressed figures. That being said, many of January’s other indicators do not point to a quick turnaround next month.”

Wilson also cited the 13.2 percent drop in New Orders from this week’s Manufacturing Report on Business to 51.3 and its core metric, the PMI, falling to 51.3 (anything below 50 signals contraction) as a concern.

Freight expenditures in January—at 2.265—were down 5.1 percent compared to December and up 1.4 percent annually, with the report observing that this decline was due in part to the 3.6 percent shipment drop from December to January. What’s more, it was observed in the report that freight expenditure movements have outpaced shipment volumes, resulting in low growth for freight rates, with truckload rates seeing modest growth and increased traction for rail rates.

Assessing the current state of the economy, Wilson said that even though many industry observers believe the economy will gain momentum this year, there are things standing in the way of that possibly happening, including: the nearly imperceptible growth in volumes; a weak global marketplace, with exports lagging expectations; not enough new jobs being created to sustain the economy; increasing interest rates

“This will have repercussions in the freight sector. The inventory levels that are now higher than those during 2009, when carrying costs were minimal, will become more burdensome and will probably lead to a drawdown similar to what we saw during the recession,” wrote Wilson. “Trucking capacity is at exactly the right level for the volume of freight we have today, but will become inadequate later this year if the predictions of a robust 2014 materialize. Obtaining credit to purchase new vehicles will become more difficult, probably squeezing out smaller and marginal trucking companies that don’t have the capital to expand their fleet or ‐ almost as important ‐ modernize their fleets. Continue to expect a bumpy ride.”

This sentiment hits home with shippers, too.

Jeff Brady, director of transportation for Harry & David, a multi-channel specialty retailer and producer of branded premium gift-quality fruit, gourmet food products and other gifts, told LM that capacity pressure is expected in the first quarter due to various factors.

“Capacity no longer just appears in January, post holiday peak, as it used to,” explained Brady. “This is driven, I feel, by a fear on the carrier’s part to add capacity in a shaky economy and that sheer fact that since 2009, carriers are playing defense. They are only recently considering loosening the purse strings but their behavior is somewhat driven not just by economic conditions but by shipper behavior. We, as shippers, must commit to the partnership and get away from this ‘transportation as a procured commodity’ mindset. Until then, we will continue to see this trend of contraction/stagnation by carriers continue, especially in light of the ever-present legislative and economic pressures.”

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

The PMI, the ISM’s index to measure growth, increased 1.8 percent to 57.1 in July. This is 1.8 percent higher than the 12-month average of 55.3. The PMI has grown in 18 of the last 20 months, with economic activity in the manufacturing sector expanding for the last 14 months as the overall economy was up for the 62nd consecutive month.

YRC Worldwide, whose regional and long-haul units provide the second-largest LTL capacity in the trucking industry, narrowed its second-quarter loss to $4.9 million on $1.32 billion revenue, compared with $15.1 million loss on $1.24 billion revenue in the year-ago quarter.

With NFL training camps in full swing, it stands to reason that Congress must be replete with football fans, given how it basically has elected to punt on federal transportation funding yet again, with the Senate yesterday signing off on a ten-month bill to keep federal surface transportation funding intact through May 2015 through a nearly $11 billion stopgap measure.

Carload volumes were up 4.3 percent at 306,988, and intermodal volume for the week ending July 26 was up 3.3 percent at 264,809

Lyon, France-based Norbert Dentressangle, a $5.5 billion global third-party logistics (3PL) services provider focused on global logistics, transport, ocean, and air services, said today it has acquired Des Moines, Iowa-based Jacobson Companies, a value-added warehousing (VAW) company, for $750 million from private equity firm Oak Hill Capital Partners.

Article Topics

News · All topics

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