Another month, another increase in freight shipments and expenditures, according to a Wednesday report from Cass Information Systems. The Cass Freight Index saw shipments move 7.7% higher year-over-year in December with expenditures up 43.6%.
Freight found its way through the supply chain and to consumers during the holiday season even as congestion and bottlenecks remained formidable. The shipments subindex increased 4.2% seasonally adjusted from November with the monthly year-over-year growth rate moving 320 basis points higher, “as shipment volumes held firm despite the normal holiday slowdown.”
“Though the record backlog of 105 containerships off Southern California and sharp declines in intermodal volumes in early 2022 still demonstrate capacity constraints on freight volumes, the strong finish to 2021 shows progress as the trucking industry has begun to build driver and equipment capacity in spite of extraordinary challenges,” Tim Denoyer, senior analyst at ACT Research, commented.
| December 2021 | y/y | 2-year | m/m | m/m (SA) |
| Shipments | 7.7% | 14.8% | 0.2% | 4.2% |
| Expenditures | 43.6% | 62.3% | 3.4% | 6.6% |
| TL Linehaul Index | 8.0% | 9.2% | -1.0% | N/A |
Higher freight rates and incremental costs associated with navigating the congestion continue to push freight spend higher. The expenditures subindex increased 6.6% (seasonally adjusted) sequentially in the month, which established another record in the dataset that began in 1990. The contribution from higher volumes was cited as driving the increase more than the rise in rates.
The expenditures index is up more than 60% from December 2019. Over that time, shipments have climbed 15% with rates surging 41%. The expenditures index was up 38% for full-year 2021 and is now expected to increase approximately 25% this year assuming normal seasonality. That’s an increase in the guidance (+18% to +20%) provided just a month ago.
Inferred rates (expenditures divided by shipments) reached a record level, up 3.5% in December on a seasonally adjusted comparison to the prior month. The year-over-year growth rate slowed 430 bps to 33.4%, which was still the third-strongest growth rate recorded in 2021.
Denoyer said the numbers continue to be partially inflated by “significant excess miles in the freight network” as a clogged rail network has forced “imports into the truckload market.” The modal switch to truck contributed to a 20% year-over-year increase in TL length of haul during the month. The monthly growth rate was partially offset by an increase in smaller less-than-truckload shipments.
Truckload accounts for more than half of index’s freight spend, with LTL, rail and parcel rounding out the top four modes.
Inferred rates were up 23% year-over-year in 2021.
The Cass Truckload Linehaul Index, which is a per-mile calculation excluding fuel and accessorials, increased 8% year-over-year (down 1% sequentially). Denoyer estimates the increase in TL length of haul reduced the index’s growth rate by 300 bps during the month as many of those shipments were tied to lower linehaul rates.
“As chassis capacity gradually recovers and rail congestion eases over the course of 2022, a reversal to shorter length of haul will likely add upward pressure to this index above and beyond market rate increases,” Denoyer said.
Looking forward, the report points to a strong consumer and the need for inventory replenishment as positive catalysts for freight demand. However, the latest COVID variant is yet another obstacle for the industry.
“While signs that an easing in the everything shortage were beginning to emerge prior to the omicron wave, the challenges to industry capacity are worsening again as 2022 begins,” Denoyer said. “Absenteeism is surging across drivers, maintenance staff and administrative personnel at transportation companies, and the effects of the latest COVID variant on factory workers will likely slow the recovery in equipment production.”
He expects the current surge in infections to be significant but short-lived and potentially chart a course for the supply chain to be released from the pandemic’s clutches, “which will have major implications for freight market dynamics.”
Data used in the Cass indexes is derived from freight bills paid by Cass, a provider of payment management solutions. Cass processes more than $26 billion in freight payables annually on behalf of its customers.