July’s Cass Freight Index Report points to switch from goods to services spending
The July edition of the Cass Freight Index, which was issued this week by Cass Information Systems, reflected an ongoing transition in consumer behavior from spending on goods to spending on services.
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.
July’s shipment reading—at 1.182—declined slightly annually, falling 0.4%, less than June’s 2.3% decrease. Shipments were down 1.7% compared to June, while falling 16.1% on a two-year stacked change basis, compared to the earlier days of the pandemic.
The report’s author Tim Denoyer, ACT Research vice president and senior analyst, wrote that July shipment levels were in line with expectations.
“Freight demand flattened out this year with inflation near 9% and significant substitution from goods back to services,” he wrote. “Considering the extraordinary goods consumption during the pandemic, a reversal as services reopened shouldn’t be much of a surprise.
He added that inventory-to-sales ratios are still below historic norms, with the major tailwind for freight demand over the past 18 months is likely fading but has not turned to a headwind at this point.
July expenditures—at 4.499 increased 28.2% annually, while falling 3.6% compared to June. This trailed June’s record 4.665 reading.
Denoyer observed that Cass estimates that roughly 8-to-10% of the annual fuel increase is due to fuel prices alone, with part of the sequential rate decline due to lower fuel prices.
