Cass Freight Index Report posts strong gains for May freight shipments and expenditures

The most recent edition of the Cass Freight Index, which was published late last week by Cass Information Systems, continued to highlight the strong pace of the economic recovery from the COVID-19 pandemic, for May, the most recent month for which data is available.

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.

The report’s shipment reading—at 1.269—was up 35.3% annually, outpacing April’s 27.6% annual spread, setting a new record for annual percentage growth and the second-best reading ever, trailing only May 2018.

The report’s author Tim Denoyer, ACT Research vice president and senior analyst, wrote that based on that statistic “it’s safe to say the pandemic recovery is progressing much faster than the recovery from the Great Recession.”

And he added that a strong annual result was expected, given the easy comparison to May 2020, due to the pandemic, coupled with the acceleration topping expectations against a similar comparison to April.  

“Some of the acceleration likely continues to be noise related to the February polar vortex, but it more than reversed the 3.1% m/m decline (SA) in April,” wrote Denoyer. “Auto production recovered a bit in May, with motor vehicle volumes on the railroads up about 4% m/m in May, although semiconductors remain a major challenge. With containership backlogs in the San Pedro Bay whittling down slower than expected despite amazing port throughput, the May surge in the Cass shipments index was also likely due to a step up in demand for inventory restocking following the recent jump in retail sales.”

For freight expenditures, Cass reported that, for May, freight expenditures grew at its fastest pace on record, increasing 49.9%. over May 2020, to 3.362, topping April’s 45.1% annual increase. The report stated that with May facing the easiest comparison of the pandemic quarantine period, tougher comparisons in the coming months will slow these annual increases essentially regardless of freight fundamentals.

Looking at freight rates, which Cass said is the calculation of expenditures divided by shipments and explains the overall movement in rates, decreased to a 10.8% annual gain in May compared to a 13.7% annual gain in April.