Shipment volumes and expenditures both slowed from the previous month and the same 2014 period, but were still “stronger than expected,” according to the latest Cass Freight Index Report.
North American shipment volumes and expenditures were relatively flat in November 2015 compared with the previous month, but are still well below 2014 levels, according to the latest Cass Freight Index Report.
The logistics payment solutions provider said overall shipment volumes showed no change from October 2015, but were down 5.13 percent compared to November 2014 and the lowest November level since 2011.
Even so, Cass said volumes for the month beat internal expectations.
“Although the economy continued to be sluggish in November, our Freight Shipments Index was stronger than expected. Freight payments decreased, as capacity to carry was abundant,” the firm said. “Black Friday sales — combined with Cyber Monday sales — were very strong this year as customers took advantage of reduced prices and discounts, placing orders before the cost of shipping goes up for the remainder of the holiday period.”
Year-over-year, overall shipment volumes dropped 5.3 percent in October after a 1.5 percent decline in September.
In November, intermodal rail shipments fell 6 percent for the month compared to November 2014 and railcar loadings were down 7.4 percent, according to data from the Association of American Railroads.
“The drop in intermodal reflects the high inventory levels faced by retailers and wholesalers and is more reflective of the goods included in the Cass Freight Shipments Index,” said Cass. “Much of the carload loss is due to drops in bulk commodities such as coal, petroleum products and metallic ores—products not as well represented in the Cass data.
“The American Trucking Associations reported that October truck tonnage index rose 1.9 percent, a reflection of the movement of inventory from warehouses and distribution centers to sales outlets readying for November holiday sales. Imports have slowed down considerably as retailers and wholesalers have ample supply for the holiday season.”
Freight expenditures dipped 1.07 percent in November from October, the fourth drop in the last five months, and were down 9.09 percent compared to November 2014.
Cass attributed the decline primarily to the decrease in overall shipment volumes, but noted “these lower volumes eased up the tight capacity constraints we faced in 2014, keeping spot prices in check for much of the year (especially the second half). Contract rate increases have been extremely moderate.”
“Some economic indicators favored by the Federal Reserve, such unemployment, household income, inflation and consumer spending, have stabilized in the last 18 months,” Cass added. “The Federal Reserve has held back from raising interest rates, but is expected to announce higher rates in December.
“This will negatively affect those companies holding record high inventories, as carrying costs will begin to rise more rapidly. The inventory-to-sales ratio has risen dramatically in 2015, indicating that inventory turnover has slowed. Consumers are still the strongest force in the marketplace and are driving our continued recovery.
“Thanksgiving, Black Friday and Cyber Monday sales were strong compared to last year, with online sales in particular soaring. Expect freight to erode in December following established seasonal trends.”
The Cass Freight Index is based on domestic freight shipments of hundreds of the company’s clients across a wide variety of industries. Cass Information Systems processes more than $26 billion in annual freight payables.
North American freight volumes beat expectations in November
