By LM Staff · March 13, 2020
The most recent edition of the Cass Freight Index Report issued this week by Cass Information Systems saw annual declines and sequential gains for February freight shipments and expenditures.
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.
February shipments—at 1.085—were down 7.5% annually and up 6.2% compared to January. Even though the decline was on the steep side, it was not as severe as January’s 9.4% annual slide, which was its largest annual decline going back to 2009.
The report’s author, David Ross, transportation analyst at Stifel, wrote that the freight market remained cold in February, despite mild temperatures, adding that unlike January, when the stock market brushed off coronavirus concerns, there is now increased uncertainty regarding containing the virus, as well as the eventual impact on consumer demand and global supply chains. What’s more, Ross said that the current situation leads to doubt of whether 2020 will see actual growth for shipments and freight costs.
With February shipments were less worse than January’s, Ross said that does not mean further improvements are on the way.
“January may have been the bottom, but the coronavirus concerns leave open the possibility of a ‘double dip’ or at least a delay in improvements,” Ross wrote in the report. “Even before the coronavirus issue…has had any impact on the U.S. transportation market, the freight market started the year weak, partially due to elevated inventories, although the inventory situation we believe is rapidly improving and may end up requiring a restock before too long.”
February freight expenditures—at 2.679—decreased 6.8% annually and were up 4.3% compared to January.
Addressing expenditures, Ross noted that the gap between volume and spending [annual comparisons] is closing, as pricing has been adjusted lower in the truckload market.
“We expect transport pricing growth to stay soft near-term, but we’re watching capacity exits and a potential re-stocking event to drive rates higher again at some point this year,” wrote Ross.
March 13, 2020