Cass freight data declines again in November

Year-over-year Cass Freight Index declines moderating, linehaul rate declines accelerating

CMA CGM container on truck

Image: Jim Allen/FreightWaves

The Cass Freight Shipments Index fell 3.3% year-over-year in November, marking one full year of year-over-year declines.

This was the first report published under new author, equity research analyst David Ross with Stifel Financial Corp. (NYSE: SF), who referred to the decline as “less bad” compared to recent results including October, when the decline approached 6%.

The report called out retail inventory destocking and a soft industrial economy as the primary reasons for the current “freight recession,” which is producing weaker shipments. Ross said he expects volumes to begin to level in 2020.

Cass Freight Index (Shipments) – SONAR: CFIS.USA

“Over the coming months, expect [year-over-year] growth to flatten out, as the industrial economy is expected to bottom, while the consumer remains relatively healthy,” Ross said.


He contends that the shipments index could see positive year-over-year comparisons as early as January 2020.

The Cass Freight Expenditures Index, which represents amounts spent to move freight, declined 1.4% year-over-year in November. This was the lowest decline reported since the July 2019 report, which was off by the same amount.

Cass Freight Index (Expenditures) – SONAR: CFIE.USA

Ross said the fact that the shipments index fell by more than the expenditures index implies pricing is higher on a year-over-year basis.

“The fact that average spend per unit is up may sound strange, given the sharp drop in spot truckload rates in 2019 vs. 2018, but most shippers move freight through the contract market, which necessarily lags any big changes in supply/demand. Therefore, many contracts that were repriced in 2018 still carried into and through much of 2019,” Ross added.


He explained that the Cass Freight Index represents multiple modes of transportation, including modes that have seen pricing power in 2019 like rail, intermodal, parcel and less-than-truckload (LTL).

Ross expects pricing growth to increase in 2020 at moderate levels as freight expenditures “modestly outpace a generally flattish volume environment.” 

Along those lines, the Truckload (TL) Linehaul Index, which measures fluctuations in the linehaul portion of dry van TL shipments on a per-mile basis, declined 3.5% year-over-year in November. This was the fourth consecutive monthly year-over-year decline and the largest in the current cycle. Ross believes that the industry has “a couple more quarters of downward rate pressure ahead due to soft demand and excess supply.” He noted a strong correlation between pricing metrics provided by publicly traded TL carriers and this linehaul index, which doesn’t bode well for the fourth quarter of 2019.

Cass Truckload Linehaul Index – SONAR: CTLI.USA

“Presently, going off this data and from conversations we’ve had with several carriers this past week, we see [fourth quarter 2019] as a soft quarter for both pricing and volumes among trucking companies,” Ross said.

However, the report pointed to the potential for a change in the current oversupply of truck capacity in the TL markets, highlighting potential headwinds to capacity like the final conversion to electronic logging devices (ELDs), the Drug & Alcohol Clearinghouse and rising insurance costs. However, Ross noted, if capacity isn’t reduced, “TL rates should remain fairly stable in 2020.”

Lastly, the Cass Intermodal Price Index came in 2.8% higher year-over-year for the month. Excess capacity in the TL market has resulted in downward pressure on intermodal loads and pricing. The report stated that when TL pricing recovers, intermodal pricing will be even stronger.

Cass Intermodal Price Index – SONAR: CIPI.USA

In addition to announcing Ross as the new author of the report, Cass previously announced a new partnership with the Global Supply Chain Institute at the University of Tennessee, Knoxville’s Haslam College of Business, in efforts to improve the methodology it uses to generate both the truckload (TL) and intermodal indexes.

The data used in the Cass indexes is derived from freight bills paid by Cass Information Systems, a provider of payment management solutions, which processes more than $28 billion in freight payables on behalf of its clients annually.


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