Cass Freight Index trends down but still posts strong gains
The most recent edition of the Cass Freight Index, which was published this week by Cass Information Systems, continued to highlight the strong pace of the economic recovery from the COVID-19 pandemic, albeit at a slower pace than in previous months, for June, the most recent month for which data is available.
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 report’s shipment reading—at 1.231—saw a 26.8% annual gain, falling short of May’s 35.3 annual increase, to 1.269, which set a new record for annual percentage growth and the second-best reading ever, trailing only May 2018. Compared to May, the June reading was off 3% and was off 4.2%, for the same period, on a seasonally-adjusted (SA) basis, following May’s 5.9% SA gain compared to April.
The report’s author Tim Denoyer, ACT Research vice president and senior analyst, wrote that while still among the top ten results in the past decade, the June shipment result indicates a little slower volume environment than May, which is consistent with several other broad freight measures, including rail volumes and spot truckloads.
“Fading Federal stimulus was likely a contributor, but our industry discussions suggest shipment volumes continue to be hindered by supply constraints, which range from driver and trailer shortages in TL and LTL to chassis shortages hampering intermodal capacity,” he added.
What’s more, June shipments were positive on a two-year stacked basis for the second month in a row, up 4.2% compared to June 2019, following a 3.3% May gain.
June freight expenditures—at 3.732—increased 56.4% annually and were up 11% compared to May and up 9.4% compared to May on a SA basis.
This annual gain represents the fastest pace of growth ever, according to the report, outpacing May’s 49.9% annual spread, as it occurred even against a slightly tougher comparisons, as higher rate trends outweighed slower shipment volumes.
“Tougher comparisons in the coming months will naturally slow these [annua] comparisons, but extraordinary growth rates will continue in the near term, driven by increases in both shipment volume and freight rates,” noted Denoyer.
Looking at freight rates, which Cass said is the calculation of expenditures divided by shipments and explains the overall movement in rates, decreased to a 23.4% annual gain in June compared to a 10.8% annual gain in May. And on a SA basis, they were up 12.3% from May to June, well outpacing May’s 7.8% decrease.
“This result confirms that the accelerating trend remained intact through Q2, but the volatility in May and June was partly due to modal mix,” observed Denoyer. “The proportion of smaller/lower-cost LTL shipments in the data set rose in May, then returned to a more normal level in June, and this mix shift pressed total embedded rates higher in June just as it pressed the series lower in May (the “wash out” noted as likely in last month’s report).”
