Cass Freight Index posts solid August gains

Both annual and sequential gains, of varying degrees, for freight shipments and expenditures were on display in the August edition of the Cass Freight Index Report from Cass Information Systems, which was released this week.

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 nine months ago, while Expenditures turned positive eight months ago. This is in part because of slightly easier comparisons, and in part because of higher oil prices they were less strong in August.  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 and a few of them are much better (airfreight, DAT Barometer).”

August shipments, at 1.158, rose 3.9% annually and were up 2.8% compared to July. The report explained that parcel volumes associated with e-commerce continue to show outstanding rates of growth, with both FedEx and UPS reporting strong U.S. domestic volumes. And according to the proprietary Broughton Capital index in the most recent month available (June), airfreight has also been showing improving strength, with the Asia Pacific lane jumping 9.5% and the Europe Atlantic lane growing 7.6% on a YoY basis. 

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.

August expenditures, at 2.499, saw a 9.7% annual gain and a 1.6% increase over July.

“Expenditures (or the total amount spent on freight) turned positive for the first time in 22 months in January 2017, albeit against an easy comparison,” wrote Broughton. “Not since 2011—when the economy was still climbing out of the recession—had this index been so low. Our expenditures index in January 2016 was the worst in five years, as demand had weakened and crude oil had fallen below $30 a barrel. Although February and March of 2016 were also weak, they were not nearly as weak as January 2016 and hence a slightly tougher comp.”

Broughton also explained that over the last several months, his firm has observed that part of the increase was a result of the relatively steady increase in the price of fuel over the last nine months.

“But, we are also seeing some improvements in pricing power of truckers and intermodal shippers,” he noted. “As an example, the proprietary Cass Truckload Linehaul Index (which measures linehaul rates and does not include fuel) rose a healthy 2.5% on a YoY basis in the month of August. The proprietary Cass Intermodal Price Index (which does include fuel), increased 1.3% in August.”