April Cass Freight Index takes a few steps back

On the heels of a positive performance in March, the April edition of the Cass Freight Index from Cass Information Systems Inc. showed that the solid trends evidenced in March did not carry over into April.

The Cass Freight Index accurately measures trends in North American shipping activity based on $20 billion in paid freight expenses of roughly 350 of America’s largest shippers, according to Cass officials.

As LM has reported, many trucking industry 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.

Freight shipments in April were down annually and sequentially compared to March. Shipments—at 1.100—were down 1.3 percent compared to April 2010 and down 3.5 percent compared to March. April marks the 33rd consecutive month shipments were above the 1.0 mark since May 2010, when shipments moved above the 1.0 mark for the first time since November 2008.

And freight expenditures at 2.382 were down 0.5 percent annually and 1.6 percent compared to March. 

The report explained that these drops are not unexpected, given the state of the overall economy. And Rosalyn Wilson, senior business analyst with Delcan Corporation and author of the annual CSCMP State of Logistics report, wrote in her analysis of the report that these declines “follow the pattern we have become accustomed to in the last several quarters—a strong surge raising expectations followed by an erosion of the gains,” adding that April’s declines are significant because they shipments and expenditures are down annually, with shipments below April 2011 levels, too, representing the slow growth experienced since 2010.

In regards to expenditures, Wilson noted that the drop in shipments precipitated most of the decline in dollars spent and that the Marc increase in expenditures is the only thing keeping year-to-date dollars spent 0.8 percent higher than end of year 2012. Another factor is diesel prices being down for more than two months, which Wilson said has slowly lowered total costs due to reductions in fuel surcharges. This situation, coupled with still-tight truck capacity and the ongoing driver shortage has seen truckload and LTL rates remain flat in conjunction with the economy, she stated.

Other factors impacting shipments and expenditures as outlined in the report included a slower growth rate for manufacturing, and a decline in China’s economic growth rate, among other factors.

“It seems like some of the same patterns we saw a year ago still remain intact, when it comes to the freight economy and how things are playing out,” a shipper whom declined to be identified told LM. “There are some reasons for optimism on some fronts, but there is also cause for concern when we look at things like how government regulations like HOS in July may impact capacity and rates. It is a matter of wait and see in many ways really.”

And Charles W. “Chuck” Clowdis, Jr., Managing Director-Transportation Advisory Services, at IHS Global Insight, said that there continue to be contrarian views as to the state of the economy versus the state of the transport industry, trucking in particular.

“Granted, unemployment dropped to 7.5% and trucking reported a reasonably strong job growth, there is still a bit of pessimism in the air,” said Clowdis. “We realize that the term ‘cautiously optimistic’ is wearing thin, but it continues to be the best thought we have regarding transport growth. We have been taking two steps forward and then two steps back.  Once we can put together a string of forwards with our reverses, a positive trend may develop.”