The July edition of the recently released Cass Freight Index, from Cass Information Systems, showed mixed results, for freight conditions that have been widely exposed to the COVID-19 pandemic going back to mid-March.
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 Cass Freight Index showed that sequential volume improvement continued…but still remains well below year-ago levels and also below where we were in the first quarter of the year,” wrote David Ross, the report’s author and transportation analyst at Stifel. “According to carriers on second quarter earnings calls, July was better than expected in the trucking market, both from a rate and demand standpoint. Rail traffic has also continued to march higher off the bottom at a faster pace than the Cass Freight Index (rail is only a small part of this index). Everything in the freight world, although mostly still below year-ago volume levels, seems at least to be moving in the same direction—up.”
July shipments—at 1.018—were down 13.1% annually, faring better than June’s -17.8% annual spread, and up 4.8% compared to June.
Ross said that shipments remain below of an ideal level, adding that the shipment index is 10.3% higher than its April lows and 6.3% below March levels.
“Given other freight volume indicators we’d expect the trend to be higher through year-end,” stated Ross. “Consumer confidence remains low and is likely driving the slow ramp of the Cass Freight Index. The economy is not yet ‘open’ again, and much uncertainty surrounds the sustainability of the government intervention/stimulus. Until we get more confidence back, expect consumer spending to be held in check a bit longer.”
July expenditures—at 2.452—were down 14.3% annually and up 2.8% compared to June.
The report said that the sequential increase was due to better volumes, while revenue per shipment was softer annually due to fuel.
“Mix changes were likely responsible for the sequential decline,” wrote Ross. “With what we’re seeing in the trucking market, hearing from the rails and the parcel carriers, rates will be increasing in the second half of 2020 ahead of the holiday season, so it won’t surprise us if the index improves at a faster rate than volumes the next few months.”