Cass Freight Index highlights ongoing gains in shipments and expenditures

Buoyed by ongoing strong economic momentum, freight shipments and expenditures each turned in a strong performance in February, according to the most recent 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.

In February, freight shipments and expenditures each saw annual gains, with shipments up for the 17th consecutive month and expenditures up for the 14th consecutive month.

“Volume has continued to grow at such a pace that capacity in most modes has become extraordinarily tight,” wrote the report’s author Broughton Capital Founder and Managing Partner Donald Broughton. “Pricing power has erupted in those modes to levels that spark overall inflationary concerns in the broader economy. Not only did the Shipments and Expenditures Indexes extend their run of positive YoY comparisons, but those comparisons have become increasingly positive, leading many to cite transportation costs as one of the many sources of potential inflation.”

February freight shipments, at 1.198, saw an 11.4% annual gain, while coming in 5.9% ahead of January. Broughton observed that this confirms that the strength of the U.S. economy continues to accelerate, adding that February’s reading is in line with the peak month of June 2014 at 1.201. What’s more, he said that January and February’s shipment readings highlight that 2018 is off to a strong start, which suggests that 2018 could be in store for a record year.

And the 11.4% annual uptick in shipments is also impressive, when considering that high percentage annual gains typically only occur when they are up against easier comparisons, whereas February is matched up against February 2016 and the freight recovery started in the second half of 2016, when annual comparisons started to get tougher.

“That these percentages are so strong-and strong against tough comparisons-explains why our outlook is so bullish, why capacity is so constrained, and why realized pricing is so strong,” wrote Broughton.

Freight expenditures in February, at 2.274, were up 14.3% annually and 5.2% compared to January. Broughton said that the annual gain is indicative of an economy that is continuing to expand, also noting that these type of annual percentage gains have not occurred since 2009-2010, when annual comparisons were easier.

And he also said that February’s annual increase “clearly signals that capacity is tight, demand is strong, and shippers are willing to pay up for services to get goods picked up and delivered in modes throughout the transportation industry.”