July Cass Freight Index Report points to annual gains and sequential declines

Freight shipments and expenditures in the July edition of the Cass Freight Index Report from Cass Information Systems, which was released this week, showed annual gains for the seventh straight month and sequential declines.

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.

“Both the Shipments and Expenditures Indexes extended their run of positive comparisons,” wrote the report’s author Broughton Capital Founder and Managing Partner Donald Broughton. “Shipments turned positive eight months ago, while Expenditures turned positive seven months ago. In part because of normal seasonality, and in part because of more difficult comparisons, they were less strong in July. Throughout the U.S. economy, we are continuing to see a growing number of data points suggesting that the economy continues to get incrementally better. Some data points are simply less bad, a few of them are much better (airfreight, DAT Barometer), but some are suggesting deceleration (rail).”

July shipments, at 1.126 were off 3.2% compared to June and up 1.4% annually. The report noted that shipment gains continue to be paced by parcel volumes associated with e-commerce showing what Broughton called “outstanding rates of growth,” with the parcel duopoly of UPS and FedEx each reporting strong U.S. domestic volumes, as well as airfreight continuing to show strength in both the Asia-Pacific and Europe-Atlantic lanes.

And the report added that when looking back at the October 2016 shipments index, which snapped a stretch of 20 months of declines, it marked one of the initial indications that a freight recovery had begin in earnest.

July expenditures at 2.460 headed up 4.5% annually and were off 1.5% compared to June. The report observed that expenditures turned positive for the first time in 22 months in January 2017 against an easy comparison, which was its lowest going back to 2011 and its lowest reading in five years at that point, due to low demand and falling oil prices that were under $30 per barrel.

Conversely, over the last several months, we have observed that part of the increase was a result of the relatively steady increase in the price of fuel over the last nine months,” wrote Broughton. “But we are also seeing some improvements in the pricing power of truckers and intermodal shippers. As an example, the proprietary Cass Truckload Linehaul Index (which measures linehaul rates and does not include fuel) rose 1.5% on a YoY basis in the month of June, following April’s 1.3% increase, which was the first increase, posted since February 2016. The proprietary Cass Intermodal Price Index (which does include fuel) increased 1.8% in June.”