Cass Freight Index Report shows positive signs for freight shipments and expenditures

By LM Staff · October 19, 2020

Freight shipments and expenditures, for the month of September, continued to trend in the right direction indicative of ongoing signs of improvement in freight markets, 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.

“The Cass Freight Index shows the ‘V’ shape of the recovery,” wrote David Ross, the report’s author and transportation analyst at Stifel. “Earlier in the year, as the economy was starting to reopen, there was a lot of speculation surrounding the shape it would take—everything from an ‘L’ to a ‘V’ to a ‘W’ to a Nike swoosh to a square root sign. Well, in looking at the Cass freight data, it was a ‘V.’ We should see positive [annual] comps for the first time all year in October, if the absolute level just holds at September levels.”

September shipments—at 1.099—were down 1.8% annually, nearly 6% better than August’s 7.6% annual decrease and were up 7.1% compared to August.

This marks the second consecutive month in which it posted its best annual comparison going back to November 2019, with the raw index number also at its highest level since November 2019.

Ross observed that the shipment index is now27.5% higher than its April lows, with the expectation that it will remain strong through the end of the year, with inventories remaining relatively lean and freight expected to keep moving.

Other reasons for optimism related to shipment growth cited by Ross included: consumer confidence, while still low, showing signs of life and growing imports, which drive a lot of freight moving through the domestic system, due, in large part, to the “inventory dump” at West Coast ports related to low inventory levels.

September expenditures, which measures the total amount spent on freight—at 2.888—rose 1.2% annually and were up 7.2% over August.

This reading represented a 29% gain over May’s low, as well as being the highest freight spend in a single month going back to June 2019, with significantly less contribution from fuel surcharge revenues.

The report pointed out that cost per shipment, which is the expenditures index divided by shipments, is heading up in tandem with rising trucking rates.

“There are real constraints on driver and industry supply and fewer trucks running, so as freight has rebounded, the capacity squeeze has driven up rates significantly,” wrote Ross. “We don’t see much capacity entering or returning the rest of the year, so as supply/demand remains tight, we expect continued growth in the average freight bill.”

October 19, 2020