Cass Freight Index shows momentum in February

After two months of declining freight shipment levels, February showed some signs of growth, according to the most recent edition of the Cass Information Systems Freight Index.

February shipments at 1.036 were up 11.4 percent year-over-year and up 4.6 percent compared to January’s 1.010. Shipments remained above the 1.0 mark for the tenth straight month, with May 2010’s 1.014 shipment mark being the first time shipments eclipsed 1.0 since November 2008.

February shipment expenditures at 2.091 were up 35 percent over February 2010, and expenditures were up 12.5 percent compared to January’s 1.859 expenditure reading.

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.

The ATA’s advance seasonally-adjusted (SA) For-Hire Truck Tonnage index was up 3.8 percent in January on the heels of December’s revised 2.5 percent (from an original 2.2 percent) gain. These gains were preceded by November’s revised 0.6 percent decline (up from -0.1 percent) and a cumulative 2.8 increase over September and October. And on an annual basis, the SA index was up 8 percent compared to January 2010, which the ATA said is the largest increase since April 2010.

The ATA’s not seasonally-adjusted (NSA) index, which represents the change in tonnage actually hauled by fleets before any seasonal adjustment, was 105.4 in January, which is a 2.9 percent decline from December. The NSA was up 5.9 percent in January compared to January 2010’s 99.5 reading.

“Freight movements [are] continuing the rise that began in the second half of January,” wrote Rosalyn Wilson, senior analyst with Delcan Corporation, in a Cass report. “The upward trend is a positive economical signal and consistent with the 11.4 percent growth in year over year shipment growth for the first two months of 2011. All modes have seen lower than expected shipments year to date due to the series of storms that gripped the nation in January and February, causing massive delays in freight movement. Truck tonnage volumes rose steadily in February, while railroad carloadings dipped slightly and intermodal shipments climbed 2.2 percent.”

But on a more cautious note, Wilson pointed out that consumer spending “remains mired in the lower levels established in 2009 and 2010 with only a marginal increase in February.”

And she added that higher fuel increases account for much of this increase, as well as higher food prices, too. With more consumer dollars spend on gas and necessities, consumers, explained Wilson, spend less on other products, coupled with retailers experiencing a “margin crunch” as they cannot pass along the full extent of price increases.

“The economy, while better still can’t handle major inflation so companies are doing everything possible to not raise prices,” said Vin Gulisano, CEO of ParcelPort, a New Haven, Connecticut-based 3PL, in a recent interview. “Fragile is the word when talking about the U.S. economy. As a result it’s getting very nasty in the Supply Chain. The customers at the top of the food chain finally see sales moving up and customers spending again, and they think that price increases could derail this. I’m not sure how all of this is going to end up. If history is any indicator, prices will go up but slowly.”

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