May Cass Freight Index shows minimal signs of improvement

By LM Staff · June 16, 2020

With minimal improvement off of dismal April readings, which were viewed as “recessionary,” the May edition of the Cass Freight Index, from Cass Information Systems, showed that the impact of the ongoing COVID-19 pandemic on freight transportation shipments and expenditures remains intact.

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 index for both shipments and expenditures remained at recessionary levels and came in >20% below May 2019,” wrote David Ross, the report’s author and transportation analyst at Stifel. “We were surprised not to see more of an uptick; the re-opening schedule appears to have unfolded slower than we anticipated—and also because the freight data reported by some of the public companies (LTL carriers and rails specifically) showed a more significant sequential jump and better [annual] improvements than Cass showed. June is normally the best month of the second quarter, and we’d expect a significant improvement in the Cass Index this month—even if still well below year-ago readings. We do not believe we will reach 2019 freight activity until 2021 (at the earliest) due to the significant rise in unemployment and other results of government intervention.”

May shipments—at 0.938—fell 23.6% annually, which was “slightly worse” than April’s 22.7% annual decline and were up 1.6% compared to April. Ross noted that this represents what he called a continued severe weakness in the U.S. economy that is counter to the stock market surge from mid-May until this week’s pull-back, while giving some justification to the pull-back.

On the expenditures side, May came in at 2.243, for a 21.2% annual decline and a 5.7% decrease compared to May.

This marks the worst reading since the global financial crisis, according to the report. Despite the sequential decline, the report noted that revenue per shipment saw a 3.1% increase.

“Our view remains that its has been a mix issue in that the freight that has been moving has a higher revenue per shipment, due to longer average length of haul (which has a negative impact on TL yield) and/or other characteristics,” wrote Ross. “And those customers who remained opened for business had a higher freight cost per shipment than those who were closed. We believe expenditures on an apples to apples basis were down more than volume, and lower fuel surcharges are offering shippers at least some near-term relief with respect to their freight budgets.”

June 16, 2020