Cass Freight Index Report shows encouraging shipment and expenditure signs, for August

While its key data points have yet to return to annual growth increases, due to the COVID-19 pandemic, the August edition of the recently released Cass Freight Index, from Cass Information Systems showed continued signs of improving freight markets, which has been the case in recent months.

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.

“Further recovery in the freight recovery was shown by the Cass Freight Index in August,” wrote David Ross, the report’s author and transportation analyst at Stifel. “This supports what we have heard from public carriers across all modes, and we believe the trend of ‘better’ has continued here in September. Expect the Cass Index to move back closer to year-ago levels in the coming months, although we think it will stay in negative territory until 2021. Rail traffic has been growing faster than the Cass Freight Index, but rail is only a small part of this index and a small part of the overall freight spend in the U.S. Still, all signs point to an improving economy, and goods movement is getting better every month.”   

August shipments—at 1.099—were off 7.6% annually, improving over July’s 13.1% annual decrease, while rising 8% over July.

In the report, Ross noted that August marks the best annual comparison going back to February, the last complete month of data prior to the onset of the pandemic, adding that the 8% sequential gain represents what he called acceleration in trend.

“The shipment index is now 19.1% higher than the April lows and at the highest absolute level since November 2019,” he wrote. “And we see it moving higher through year-end, as inventories remain relatively lean.”

What’s more, Ross explained that a key driver for the shipment gains relates to growing import activity, especially in West Coast ports, over the summer months. He likened increased West Coast activity to what he called “an inventory dump,” with companies bringing in more containers than usual to West Coast ports and then moving via truck or rail inland to help with low inventory levels. And he said that shippers are choosing to pay higher transport costs to keep goods in stock, as opposed to waiting for the extended transit times required for containers from Asia to make it to U.S. East Coast ports.

August expenditures—at 2.695—were down 5.1% compared to August 2019 and up 9.9% compared to July.

The report said that this tally represents the highest monthly level of freight spend going back to December 2019, adding that is also with significantly less contribution from fuel surcharge revenue.

Author Ross said that for carriers, trends for revenue per shipment, which is the expenditures index divided by shipments, have reversed and are now increasing, due to trucking rates heading up, coupled with real restraints on driver and industry supply, at the moment.

“We don’t see much capacity entering or returning the rest of the year, so as supply/demand remains tight, expect continued growth in the average freight bill,” wrote Ross.