Shipment volumes and payments for the month showed continued growth but remained below 2014 levels, according to the latest Cass Freight Index Report.
North American shipment volumes and expenditures rose for the fifth month in a row in May 2015, but still remain below 2014 levels, according to the latest Cass Freight Index Report.
The logistics payment solutions provider said overall shipment volumes rose 0.2 percent in June compared to May, but were still down 3.4 percent compared to June of 2014.
Cass attributed the weaker volumes to slow manufacturing in the first half of 2015, which it said started to recover in June.
“First quarter orders were sluggish because of both bad weather and shipments that got tied up in the West Coast port problems,” added Cass. “The strength of the U.S. Dollar in world markets has severely curtailed exports, which has contributed to the drop in manufacturing.”
Intermodal rail shipments were up 2.9 percent for the month and railcar loadings increased 1.2 percent compared to the previous month, according to Cass. “The Association of American Railroads reported that the June intermodal figure of 1,117,149 containers and trailers was the highest in history,” the company said.
Freight expenditures increased grew 2.4 percent in June, the fifth consecutive month of growth after a “dismal” January, but were still 5.8 percent lower than June 2014. Payments rose 4.3 percent in February, 1 percent in March, 1.6 percent in April, and 1.5 percent in May.
Freight payments have increased 5.1 percent overall since the beginning of the year, while shipments have grown 7.6 percent in the same time period. “This indicates that rates have not been rising substantially,” said Cass. “Capacity has been keeping pace with the increase in shipment volume so there has not been significant pressure on rates. At just below one hundred percent capacity utilization, the trucking industry is still walking a delicate tightrope, but carriers are reporting that they are reluctant to give up a good customer because of rates and are settling for lower rates.”
Cass noted that freight is improving despite “tepid” growth in the overall economy. “As we head into the second half of the year, expect a leveling off or even a drop in July shipment volume. This is traditionally a slow month. Things will begin to pick up again in August as we head into school and then holiday shipping,” said Cass.
“No remedy is expected from the Federal Reserve to lower the strength of the dollar, so exports will continue to be very weak,” it added. “The same dollar strength makes import goods more attractive for the U.S. consumer because of the increased buying power. The just-completed nuclear deal with Iran will lift the sanctions against Iranian oil, so that should begin to flow again. This will dramatically lower the price of oil and give consumers some extra cash in their pockets, which should translate to stronger retail sales in the latter part 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 volumes inch up in June
