Shipment volumes grew 1.4 percent during the month, but expenditures declined 1 percent from February, according to the latest Cass Freight Index Report.
North American shipment volumes grew 1.4 percent in March 2016, but expenditures declined 1 percent compared with the previous month, according to the latest Cass Freight Index Report.
Despite the slight improvement from February, shipments were still down 1.5 percent from March 2015, while payments fell 7 percent year-over-year.
The logistics payment solutions provider said the tepid results in March were in line with the expected seasonal trend, as March shipment volumes have grown at a slower pace than in February for the last few years.
The March 2016 index reading remains 6.2 percent lower than in December 2015, “indicating that the plummet in January is going to take quite some time to dig out of,” said Cass. The average reading for the first quarter of 2016 was down 3.0 percent from the same 2015 period.
Cass noted railroad shipments picked up in March with a 22.2 percent rise in carloads and a 19.2 percent increase in intermodal shipments following double-digit declines in February.
The negative growth in freight payments in March on the heels of a 6.3 percent bump in February, on the other hand, is a departure from the trend seen in recent years.
“The decline capacity was not an issue for any of the modes in most places, so spot prices were flat or down,” said Cass. “Railroads instituted price increases often in 2015 — matching the need for their services — but have been slower to do so in 2016. Tariff rates for some goods are scheduled in increase on April 15th. Truck rate changes have been extremely moderate and most shippers are not expecting much of a change in the first half of 2016.
“Slow economic growth is not a good environment for rate increases,” it added. “After falling to the lowest levels in recent history in February, diesel prices are creeping back up, rising 4.6 percent in March.”
Overall, Cass indicated the economy is sending mixed signals in terms of future growth.
“By some measures the economy appears to be in good shape,” it said. “March employment figures were strong, especially for construction, which gained 37,000 jobs, and retail, which gained 48,000. Average hourly wages grew by 7 cents an hour, housing starts and home sales had moderate growth, inflation is low, and February exports were up 1.5 percent.
“On the downside, consumer spending has been sluggish; business investment has been weak; unemployment went from 4.9 to 5.0 in March; new building permits declined in April; the dollar remains robust in world markets (hurting our export prices); and, finally, the Federal Reserve is divided on the next course of action. At their March meeting, the Fed chose not to raise the interest rate, but they have said they are planning two increases this year, timing TBD,” added Cass.
“Global economic conditions are still weak and fragile in some economies, adding a level of uncertainty to the U.S. economy. 2016 is turning out to be difficult to predict. Anecdotally, however, many players in the supply chain remain cautiously optimistic for the rest of the year.”
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 a mixed bag in March
