July freight shipments and expenditures see declines, notes Cass Freight Index

Freight shipment and expenditure readings again saw declines in July, according to the new edition of the Cass Freight Index, 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. What’s more, the Cass Transportation Indexes accurately measure changes in North American freight activity and costs based on $44 billion in paid freight expenses for the Cass customer base of hundreds of large shippers.  

July’s shipment reading—at 1.122—was down 8.9% annually and down 2.2% compared to June. It also trailed August 2022’s 1.278 reading, which marked the highest level for shipments since May 2018. On a two-year stacked change basis, July shipments were down 4.7% and down 1.2% on a month-to-month seasonally adjusted (SA) basis.  

“Declining real retail sales and destocking remain the primary issues, but dynamics are shifting as real incomes improve and the worst of the destock is in the rearview,” wrote the report’s author Tim Denoyer, ACT Research vice president and senior analyst. “In seasonally adjusted (SA) terms, the index is now 13% below the December 2021 cycle peak, slightly greater than the peak-to-trough declines in two of the three downcycles in the past dozen years.”

Denoyer added that with normal seasonality, the freight shipments index would increase slightly on a month-to-month basis in August but decline about 11% annually compared to what he called an “extraordinary time last summer,” when destocking was actually creating freight demand as retailers were shipping out stale inventory.

“Even adjusting for the strange comparison, this will probably overstate the pressure on national freight volumes because the for-hire market is losing share,” he wrote.

July expenditures, at 3.423, were down 24.4% annually, in line with June’s 24.5% annual decline and were off 2.8% compared to June. On a two-year stacked-change basis, July expenditures were down 2.5 and were down 2.0% on a month-to-month seasonally adjusted basis.

“The expenditures component of the Cass Freight Index rose 23% in 2022, after a record 38% increase in 2021, but is set to decline about 18% in 2023, assuming normal seasonal patterns from here,” noted Denoyer. “Both freight volume and rates remain under pressure at this point in the cycle, but fuel price increases could limit the savings for shippers.”