Shipment volumes and, expenditures both decreased compared with June figures, but this is “in line with the seasonal patterns of the last five years,” according to the latest Cass Freight Index Report.
North American shipment volumes and expenditures both fell in July 2015 after increasing for five consecutive months, which is “in line with the seasonal patterns of the last five years,” according to the latest Cass Freight Index Report.
The logistics payment solutions provider said overall shipment volumes fell 1.6 percent in July compared to June, and were down 1.1 percent compared to July of 2014.
Cass said of the weaker volumes, “July is traditionally a slow month for freight as it lies between the surges of back‐to‐school and the holidays.
“Although both indexes are below last year’s levels at this time, they compare quite favorably with prior years,” it added. “There should be an element of caution when comparing 2015 results to 2014 since last year was the best year the freight sector has experienced since the recession.”
Intermodal rail shipments were down 7.4 percent for the month, while railcar loadings increased 1.8 percent compared to the previous month, according to the Association of American Railroads. The American Trucking Associations reported June truck tonnage decreased 0.8 percent.
“With new orders down in April and May—having slowed because inventories were high and the summer months tend to see retail sales to make room for fall and holiday stock—lower shipping volumes naturally followed,” said Cass. The company noted, however, overall year-to-date shipment volumes have increased 5.8 percent compared with 2014, and “If recent trends hold true, expect a significant increase in August.”
Freight expenditures fell 4.5 percent in July, only the second decrease in 2015 after a “dismal” January that was then followed by five consecutive months. Cass said the decrease “mirrored the similar sharp decline of 3.9 percent in July 2014 and was not unexpected.” Expenditures were down 6.1 percent compared with June 2014.
“Although the decrease in freight expenditures was larger than the decrease in the number of shipments, the trend in lower tonnage indicates that rates are fairly stable,” explained Cass. “Capacity pressures have eased somewhat during this lull which has kept spot rates fairly flat. The anticipated increase of freight in August and September could lead to tight capacity for trucking, but trucking companies have not been standing firm on recent rate increases.”
Cass noted the Commerce Department recently released an early estimate for second quarter GDP of an annual growth rate of 2.3 percent, which is higher than some economists had forecast given a relatively poor showing in the first quarter. “The second quarter rise is attributed to growth in personal consumption, another indicator that consumers are ‘back in the game,’” said Cass.
“Consumer spending was largely responsible for the banner year in 2014,” it added. “There has been a lot of negative press about the current strength of the economy, but with many of those comparisons being against a strong 2014, it is no surprise they would not be favorable. Comparing to the previous several years demonstrates that the economy is exiting its prolonged dormant state and consumers are finally leading the way. For the remainder of the year, both imports and exports should pick up, domestic production will gain strength, and consumers will spend.”
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 see seasonal slip in July
