Cass Freight Index Report sees sequential gains in June

Both freight shipments and expenditures in June saw sequential gains, according to data in the June edition of the Cass Freight Index Report issued by Cass Information Systems today.

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.

June shipments were up 1.7 percent at 1.11 compared to May on the heels of a 1.3 percent increase from April to May, and they were down 4.3 percent annually, which is an improvement compared to the 5.8 percent annual decline in May. Shipments were 7.6 percent below June 2014 levels.

Cass partially attributed June’s sequential gain to stores already stocking school supplies, as well as decent gains in June for both carload and intermodal shipments, which saw 29.3 percent and 23.4 percent June gains, respectively, according to Association of American Railroads data. Cass also pointed to spot market loads being up 28 percent in June. But even though these shipment patterns match up with those of the last two years, Cass said “they are sill below the volume in the last two years,” adding that July usually sees a dip in freight shipment numbers, while the first part of July appeared to be robust.

June expenditures were up 3.9 percent over May at 2.37, which Cass said represents the second largest increase in 2016, adding that it is primarily due to shipment growth. But annually shipments are down 8.8 percent. Cass pointed to DAT’s data showing that volumes and rates largely saw gains for spot market moves, while also noting that abundant available truck capacity has provided strong competition for rail intermodal and, in turn, held down rates for both modes.

As for the remainder of 2016 on the rates front, Cass expects rates to remain flat with expenditure changes tied closely to freight shipment volumes.

“The first half of the year’s economic performance has been perplexing,” wrote Rosalyn Wilson, founder and president of FreightMatters, and author of the report. “Consumer spending has been growing, although the effect on freight is small as most of this increase has been in the service sector (which hired 256,000 new workers in June). Inventories are mostly unchanged at uncomfortably high levels, but the inventory-to-sales ratio fell in April for the first time in over a year. Exports and imports are down, residential and commercial construction has been slowing, and consumer spending on goods is weak. That said, the manufacturing sector is awakening with a 3.9 percent growth in production, 2.3 percent increase in new orders and an 11.7 percent growth in order backlog. The Federal Reserve recently decided against another interest rate hike, citing “considerable uncertainty” in the U.S. economic outlook and “vulnerabilities” from abroad. While the second quarter was stronger than the first, the mixed signals in the air make the third quarter uncertain.”