Even with declines, Cass Freight Index report provides some reasons for optimism

Following mixed output for the month of October, the Cass Freight Index Report from Cass Information Systems, which was released late last week, reported declines for both shipments and expenditures in November.

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.

November shipments, coming off of its first increase after 20 months of declines in October, fell back into negative territory, down 0.5 percent annually in October at 1.087 and down 3 percent compared to October.

While shipments were down, the report noted that it does not create a major cause for concern, with some degree of normal seasonality at work, coupled with Donald Broughton, the report’s author and transportation analyst at Avondale Partners, noting that on an industry and anecdotal basis market sentiment indicates there are daily reports of stronger shipment volume in almost all modes of freight transportation.

And Broughton also noted that there has been continued volume growth in the form of continued volume growth in parcel and airfreight spurred on by e-commerce activity, as well as sequential gains in truck volumes and “less bad” rail and barge volume.

“Data is beginning to suggest that the consumer is finally starting to spend a little, and that with the recent surge in the price of crude the industrial economy’s rate of deceleration has eased,” he wrote. “If the winter of the current year-and-a-half freight recession in the U.S. is not over, it is certainly showing signs of thawing.”   

Freight expenditures were down 1.8 percent to 2.300 from October to November and off 4.5 percent annually.

The report explained that the 4.5 percent annual decline was less than the rates of contraction from May through August on an annual basis, which were down 10.1 percent, 8.8 percent, 5.1 percent, and 6.3 percent, respectively.

Broughton said this speaks to a result of the steady increase in fuel prices over the last six months along with gains in pricing power of both truckers and intermodal shippers.

The analyst also stressed at as a fundamental rule of marketplaces volume leads growth.

“Repeatedly we have watched in a host of different markets, volume goes up before pricing starts to improve and volume goes down before pricing starts to weaken,” he wrote. “Even in markets as basic as the weather, the number of hours of sunshine (start to decline) falls long before the temperature starts to fall. As we approach the shortest day of the year in the northern hemisphere (December 21st), we know that the coldest temperatures are still coming in the months of January and February, weeks after the volume of sunshine will actually have started to improve.