Shipment volumes and expenditures both saw a slight decrease compared with July figures, which is not typical for the month, according to the latest Cass Freight Index Report.
North American shipment volumes and expenditures both fell for the second straight month in August 2015 after increasing for five consecutive months, according to the latest Cass Freight Index Report.
The logistics payment solutions provider said overall shipment volumes fell 1.2 percent in August compared to July following a 1.2 percent decline in July.
Cass said the decline in August was “a diversion from the normal pattern we see at this time of year.”
“The drop in freight spending was sharper than expected, however, as truck spot prices fell lower due to abundant capacity,” it added. “The decline in shipments did not follow the typical upward movement in August, but given the weak level of new manufacturing orders placed in June and July it is not unanticipated.”
Intermodal rail shipments were up 3.5 percent for the month, while railcar loadings increased 2.7 percent compared to the previous month, according to the Association of American Railroads. The American Trucking Associations reported July truck tonnage decreased 0.8 percent.
“New orders for consumer goods were down; it’s hard to tell if this is a sign or simply that there is already enough inventory to satisfy consumer needs,” said Cass. “New export orders dropped 3.2 percent as our goods continue to be relatively more expensive in world markets because of the high value of the dollar relative to other currencies.
“Also, the economic difficulties being experienced in China — our largest trading partner outside of North America — have reduced the amount of exports we have been shipping there. Freight shipments should rebound in September as goods begin to arrive for the holiday season.”
Freight expenditures fell 2.0 percent in August after dropping 4.5 percent in July. Cass noted that while August is “typically a slower month for freight, capacity is generally not a problem and better rates can often be found on the spot market. Spot market prices were lower in August, contributing to the decline.
“The expected pickup in freight shipments in September should drive overall freight expenditures back up. Rates will remain flat for the most part, as trucking companies forgo rate increases to keep their best customers.”
Cass also noted the Commerce Department recently revised its early estimate for second quarter GDP to an annual growth rate of 3.7 percent, adding momentum to the 0.6 percent growth rate in the first quarter.
“Although activity continues to be slower than last year, it’s still much better than we have seen in other recent years,” said Cass. “Despite many headwinds, the transportation sector continues to grow and prosper, largely because consumers are back in the marketplace…The recent growth in jobs creation and the drop in gas prices have strengthened consumers’ belief that the economy is prospering.
“Retail sales were up in July, the latest month for which figures are available,” it added. “Industrial production weakened throughout most of 2015, but picked up again in June and July—a sign that things may be turning around for domestic production and sales. Exports will probably not rebound before the end of the year. The strong dollar is curbing sales to an already weak global market. U.S. farmers are holding on to their harvest because of low prices, so this could also impact exports negatively.”
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 dip again in August
