The impact of the Omicron variant on freight shipments and expenditures in January was apparent, according to the most recent edition of the Cass Freight Index, which was issued this week by Cass Information Systems.
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.
January’s shipment reading—at 1.078—fell 2.9% annually, coming off of a 7.7% annual gain in December, and 4.5%, 0.8%, and 0.4% annual gains for November, October, and September, respectively. And it was up 5.5% on a two-year stacked change basis. Shipments were down 10.8% and 7.4% compared to December on a month-to-month change and seasonally-adjusted month-to-month change, respectively.
The report’s author Tim Denoyer, ACT Research vice president and senior analyst, noted that U.S. freight volumes reeled in January from the surge in Omicron cases.
“The 7.4% m/m (SA) drop in January in the shipments component of the Cass Freight Index is about as good an answer as we have to the question of how big an impact Omicron-related absenteeism and quarantines had on the freight economy,” wrote Denoyer. “While these effects are lingering in February, they are beginning to fade and we expect a rebound in the coming months as case counts fall sharply.”
What’s more, Denoyer explained that this was not a demand-driven decline, as inventories are still lean and consumer balance sheets strong.
“Though the backlog of containerships off Southern California was down to 78 as of February 9th from a peak of 109 a month earlier, per our friends at MX SoCal, backlogs have been growing at several other ports, particularly Houston, Charleston and Virginia,” he wrote. “This was yet another setback on the supply side.”
January expenditures—at 4.027—saw a 31.2% annual increase, in tandem with U.S. wholesale inflation up 9.7% annually for the month, as per U.S. Department of Labor data. Expenditures were up 56.8% on a two-year stacked change basis, and were off 8.9% and 6.1%, respectively, on a month-to-month and a seasonally-adjusted month-to-month change basis.
“This index rose 38% in 2021, after a 7% decline in 2020 and no change in 2019,” wrote Denoyer. “Tougher comparisons in the coming months will naturally slow these y/y increases, but just using normal seasonality from here, the increase in 2022 will still be about 20% at this Omicron-pressured trend level.”