Shipment volumes for the month grew 3.2 percent year-over-year, while expenditures rose 4.6 percent, according to the latest Cass Freight Index Report.
The North American freight market showed continued strong volumes and stronger pricing in September 2017, with shipments increasing 3.2 percent and expenditures increasing 4.6 percent year-over-year, according to the latest Cass Freight Index Report.
The 3.2 percent year-over-year increase in the index is another data point which confirms that the first positive indication in October 2016 was a change in trend. Data continues to suggest that the consumer is spending, though not with brick and mortar retailers. The index suggests that the overall freight recession, which began in March 2015, appears to be over and freight seems to be gaining momentum in most segments.
“After posting an extraordinary 7.4 percent year-over-year increase in May, the Cass Freight Expenditures Index posted a still respectable 5.4 percent increase in June and a 4.5 percent increase in July, and then proceeded to post a blow-out 9.7 percent in August. Although not as strong as August, September’s 4.6 percent increase was still respectable and indicative of an economy that is continuing to expand,” said Donald Broughton, founder and managing partner of Broughton Capital and author of the report.
The index also shows improvements in the pricing power of truckers and intermodal shippers. “As an example, the proprietary Cass Truckload Linehaul Index (which measures linehaul rates and does not include fuel) rose a healthy 4.3 percent on a YoY basis in the month of September. The proprietary Cass Intermodal Price Index (which does include fuel), increased 4 percent in September,” Broughton said.
Broughton cites parcel volumes associated with e-commerce as a driving rate for growth in shipment volumes. According to the proprietary Broughton Capital index for June, airfreight has also been showing improving strength, with the Asia Pacific lane jumping 9.5 percent and the Europe Atlantic lane growing 7.6 percent on a year-over-year basis. “The recent surge in Asia Pacific airfreight gives us increasing confidence in the technology segment of the global economy, not because everything that moves in this lane is a semiconductor, but because the largest overall segment/type of good that is moved via airfreight in this lane has one or more semiconductors in it. Hence, there historically has been a high level of correlation between Asia Pacific airfreight and semiconductor billings. This is good news for economies in Asia, and good news for the technology segments of the U.S. economy,” said Broughton.
Rail growth appears to be slowing, according to the index, as the Association of American Railroads (AAR) reported that overall commodity carloads originated by U.S. Class 1 railroads were up only 0.2 percent in recent weeks, although intermodal units grew by a more encouraging 6.8 percent. Broughton cites three reasons as to why rail volumes are weakening: the value of the U.S. Dollar, automotive and housing. A stronger U.S. Dollar leads to fewer commodity exports and lower levels of domestic manufacturing, said Broughton. Automotive shipments peaked in 2016 and before the hurricanes were on pace to be down 8-10 percent, and building materials have indicated that housing starts in 2017 will fall short of 2016 levels.
However, the hurricanes this fall have to potential to reverse the trends in automotive and housing, said Broughton. As Texas and Florida start to rebuild, housing is rising and construction material moved by rail have gone up to over 1,000 carloads per week above last year’s levels.
In the trucking industry, tonnage has grown, with the three-month moving average reaching 4.3 percent, according to the American Trucking Associations (ATA) data. Broughton said that recent trucking industry data released by the ATA is mixed, but recent indications from DAT Solutions is more in line with Cass data and indicates a much stronger outlook for trucking.
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 $20 billion in annual freight payables.
North American freight market continues strong growth in September
