Freight transportation shipments and expenditures in November saw annual gains and sequential declines, according to the most recent edition of the Cass Freight Index Report, which was recently issued by 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.
November shipments, at 1.162, eked out a modest 0.6% annual gain and were down 5.1% annually. This marks the 26th consecutive month of shipment growth.
While these figures may appear to be modest on the surface, coupled with the report’s author, Donald Broughton, principal of Broughton Capital, noting that November signaled another month of high volatility and a sense of growing uncertainty in both the U.S. and global financial markets, the transportation economy continues to signal economic expansion.
“The hard data of physical goods flow, which is uninfluenced by human emotion, confirms that people are still making things, shipping things, and buying / consuming things,” wrote Broughton in the report. “Although not at the scorching pace attained earlier this year, expansion is still taking place at an above average pace.”
What’s more, shipment growth is expected to remain intact, the report noted, with the consumer economy continuing to accelerate, coupled with U.S. retailers and e-tailers signaling that they expect a record holiday shopping seasons from consumers by ordering enough goods from Asia that an all-time record was established.
But the report also cautioned that challenges are looming in the form of current tariffs and threats of even higher tariffs, which, it said, has throttled volumes in some areas of the U.S. economy, specifically agriculture exports and other select raw materials. Another challenge has to do with the recent decline in WTI crude oil, which is currently below $55 per barrel.
November expenditures, at 2.849, saw an 8.4% annual increase, for its 23rd straight annual gain, and were down 2.4% compared to October.
Broughton said that the report is signaling continued overall pricing power for those in the marketplace that move freight.
“Demand is exceeding capacity in most modes of transportation by a material amount,” he wrote. “In turn, pricing power has erupted in those modes to levels that spark overall inflationary concerns in the broader economy. Given the higher price of oil (resulting in higher fuel surcharges), and the strength in rates being experienced in sectors such as flatbed and chemical railroading, it should come as no surprise that the Cass Freight Expenditures Index is reporting such overall strength in transportation spending.”
And while November expenditures were up 8.4% annually, he said that concerns over inflation are quelled for a few different reasons, including: