Shipment volumes and expenditures both increased from the previous month as shippers prepared for the upcoming holiday season, but still lagged behind 2014 figures, according to the latest Cass Freight Index Report.
North American shipment volumes and expenditures both increased in September 2015 after falling for two consecutive months, according to the latest Cass Freight Index Report.
The logistics payment solutions provider said overall shipment volumes grew 1.7 percent in September compared to the previous month following 1.2 percent declines in both August and July.
Cass said the increase was “expected,” as “September is often the final growth spurt for the year,” historically speaking.
“This is a traditional month for a rise because shippers are receiving goods for the holiday season,” added Cass. “The strong U.S. dollar and a sluggish global economy are continuing to make imports very attractive.”
Intermodal rail shipments were up 22.6 percent for the month, as were railcar loadings, accounting for the majority of the overall month-over-month increase in volumes.
Despite the month-over-month increase, however, shipment volumes in September 2015 were still down 1.5 percent compared to September 2014.
New export orders rose 1.4 percent rise, bolstering a 2.3 percent increase in order backlog. “Consumer sentiment has been mostly strong, but less stable, in the last several periods,” noted Cass.
Freight expenditures grew 2.4 percent in September after dropping 2.0 percent and 4.5 percent in August and July, respectively. “Spot prices have been lower because of adequate capacity during the slowdown in August,” said Cass. “Trucking companies are holding rate increases down, and offering capacity guarantees in exchange for higher rates.
“There has also been a steady growth in dedicated carriage agreements. We expect rate increases for the trucking sector to be modest through the end of the year. The exceptions are UPS and FedEx, which have already announced a round of price increases that will go into effect in November, just as the holiday shipping season begins to heat up.”
According to Cass, the primary factor affecting current freight volumes is mounting inventory levels.
“All business inventories are continuing to grow, as are inventory‐to‐sales ratios, indicating that we are not at optimal levels given inventory turnover rates,” the firm said. “In the first half of 2015, retail inventories rose 2.9 percent, compared to only 2.3 percent for all of 2014; manufacturing inventories increased 3.0 percent, compared to a decline of .25 percent in 2014. Wholesale inventories are up 2.3 percent in 2015, compared to 3.9 percent in all of 2014.
“Low interest rates, favorable import prices and moderate storage costs have encouraged the buildup, but even a one percent rise in interest rates could fuel a 2.3 percent rise in total logistics costs at current inventory levels. With the Federal Reserve choosing not to raise interest rates at its recent meeting, yet not ruling out an increase prior to year‐end, the potential for an uptick in consumer spending and a drawdown in inventory levels is uncertain.”
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 rebound in September
