April freight shipments and expenditures signal positive freight environment, says Cass
March freight shipments and expenditures continued to show annual and sequential growth in April, according to the most recent edition of the Cass Freight Index Report from Cass Information Systems, which was released this week.
Both freight shipments and expenditures continued to show annual and sequential growth in April, 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.
Freight shipments and expenditures have now seen annual gains for 18 and 15 months, respectively, the report said.
“They are still displaying accelerating strength on top of increasingly difficult comparisons, but while capacity is tight it is slightly less tight,” wrote the report’s author Broughton Capital Founder and Managing Partner Donald Broughton. “That said, demand is still exceeding capacity in most modes by a significant amount. In turn, pricing power has erupted in those modes to levels that spark overall inflationary concerns in the broader economy. As we explained in previous months, we do not fear long-term inflationary pressure as technology provides multiple ways to ever-increase asset utilization and price discovery in all parts of the economy, especially in transportation. In fact, we are seeing early signs that ELDs (Electronic Logging Devices) initially hurt the capacity/utilization of truckers, especially small truckers, but those truckers most adversely effected are now beginning to get some of the loss in utilization back.”
Broughton explained that the current level of volume and pricing growth serves as a signal that the U.S. economy is not only growing but also that the level of growth is expanding
April freight shipments, at 1.234, were up 10.2% compared to April 2017 and were up 2.1% over March, and Broughton pointed out that the annual gain is a key data point in explaining that the strength in the U.S. economy continues to accelerate. What’s more, he noted that this 10.2% improvement typically only gets reached on the heels of a recession, rather than when going up against strong numbers.
Looking at the first four months of 2018, Broughton said that shipment data indicates that, “barring a negative ‘shock event,’’ will be a solid year for transportation and the economy.
“That these percentage increases 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.
April freight expenditures, at 2.740, are up 12.8% annually and up 0.6% compared to March.
Broughton said that, like on the shipments side, Cass data needs to go back to the easy comparisons of 2009-2010 to see comparable large percentage gains.
“April’s 12.8% 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,” said Broughton.
