Trucking news: Cass Freight Index is up in June
May’s freight expenditures and shipments both increased from the previous month’s activity. This is the fourth month in a row that both indices have increased over the previous month’s activity. This is also the first time shipments are above 1.0 since November of 2008.
July 02, 2010 - LM Editorial
While some economic indices have taken a hit in the last week, one that keeps making forward progress is the Cass Information Systems Freight Index.
The Index, which measures the number of shipments and expenditures that are processed through Cass’s account payable systems, indicated that June shipments at 1.106 were 8.8 percent higher than May’s 1.014 and 15.6 percent better than June 2009’s 0.933.
May marked the first time that shipments were above 1.0 since November 2008, and June’s performance kept that trend headed in a positive direction.
June’s shipment expenditures at 1.919 were 7.7 percent better than May’s 1.784, and were 22.4 percent better than June 2009’s 1.489. Cass officials noted that June marked the fifth straight month that both shipments and expenditures were up over the previous month.
Many trucking industry executives and analysts consider the Cass Freight Index as an accurate barometer of freight volumes and market conditions, with Credit Suisse analyst Chris Ceraso stating in research notes 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.
And today’s Cass data follows last week’s ATA monthly tonnage report, which noted that its advanced seasonally-adjusted (SA) For-Hire Truck Tonnage Index slipped 0.6 percent in May from June, marking only the second time in the last eight recorded months that the SA has dipped.
The ATA also reported that its not seasonally-adjusted index (NSA), which represents the change in tonnage actually hauled by fleets before any seasonal adjustment, hit 108.3 in May, down 2.3 percent from April. The NSA was up 5.8 percent year-over-year.
The NSA’s steady annual gain is indicative of a recovering market even with sequential SA and NSA declines in May. Some industry analysts maintain that the not seasonally-adjusted index is more useful, because it is comprised of what truckers haul.
Even with the positive inroads observed in the Cass Freight Index, there are various factors at work that will have an influence on how things shake out in the second half of the year, including inventory restocking, diesel prices, trucking capacity, demand, and consumer confidence, among others.
What’s more, there stands to reason that the second half may see things slow down a bit compared to the first half of the year.
“There was a flattening in volumes for some of the flatbed commodities near the end of the second quarter…and there was also a fair amount of inventory replenishment taking place,” said Stifel Nicolaus analyst John Larkin in an interview. “There were also a lot of fiscal and monetary stimuli on full throttle, too.”
Other factors cited by Larkin for what could be a slower second half of the year, include consumers still being careful when it comes to spending, which could mean that industrial production will not make up for a decline in consumer spending.