Shipment volumes and expenditures both bounced back in February, climbing 8.3 percent and 6.3 percent, respectively, from the previous month, according to the latest Cass Freight Index Report.
North American shipment volumes and expenditures both bounced back in February 2016, climbing 8.3 percent and 6.3 percent, respectively, compared with the previous month, according to the latest Cass Freight Index Report.
Despite the improvement from January, shipments and payments were still down 2.6 percent and 5.1 percent, respectively, compared with February 2015.
The logistics payment solutions provider said the “strong growth in freight in February is the expected trend, but the recent four-month slide in freight traffic put the starting point for 2016 significantly lower than in the last several years.”
Year-over-year, overall shipment volumes dropped 3.7 percent in December 2015 after declining 5.13 percent in November, 5.3 percent in October and 1.5 percent in September.
“Economic growth slowed more than expected in the fourth quarter of 2015 and continued into January,” said Cass. “The robust turnaround this month signals improvement, but current economic conditions do not support a robust rebound. Global markets are still weak—especially with China’s economic turmoil—which is reducing demand; the U.S. dollar remains strong, making our export goods more expensive on world markets; consumers are in a stronger position with positive income growth, but still remain conservative in their spending; and more growth has been seen in the purchase of services (eating out, hotels, airfare, movies, etc.) rather than goods purchases.
“Inventories remain very high in the goods sectors, which has reduced imports and domestic manufacturing,” it added.
Looking forward to the rest of 2016, Cass said it expects continued growth in March, but cautioned the market will continue to be weak for first half of the year.
“There are abundant opportunities for the economy to stumble in 2016, but underlying economic indicators are pointing to a sluggish first half of 2016,” it said. “The goods sector is fast approaching the need to rationalize bloated inventories as it did midway through the recession.
“Interest rates and warehousing costs are on the rise, increasing the cost of carrying that inventory. Carrying costs have been so low since the recession that they were not a major concern, but with the Federal Reserve again considering another interest rate increase those costs cannot be ignored.
“Imports are holding their own as the strong U.S. dollar makes others’ goods cheaper to us, but exports are not flourishing because of the low demand for goods in general and the availability of lower-priced goods from foreign markets,” added Cass.
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 market rebounds in February
