Cass indicators mixed in June

Cass indicators mixed in June

Shipments, spend up slightly; linehaul, intermodal continue to slip

Freight shipments and expenditures edged up in June after three months of lackluster performance, according to the monthly Cass Freight Index Report. But the company's linehaul and intermodal measures both fell again last month.

The June freight shipments index climbed 1.7 percent. This was 4.3 percent below last year and 7.6 percent lower than June 2014. Stores are already stocking school supplies, which accounts for some of the rise, the report notes.

“June’s shipments are in step with patterns that have been observed in the past few years, but are still well below the volume in the last two years,” report author and supply chain analyst Rosalyn Wilson says. “July usually sees a dip in the number of freight shipments, but the first part of July seems to be fairly robust.”

Total freight expenditures jumped 3.9 percent in June—the second largest increase this year. Most of this increase can be attributed to the growth in shipments. June 2016 is still 8.8 percent below June 2015.

“Abundant available truck capacity has provided strong competition for rail intermodal, holding down rates for both,” Wilson says. “With the relatively slow and bumpy freight market so far in 2016, rates should stay flat with expenditure changes tied closely to the volume of freight shipments.”

The Cass Freight Index represents monthly levels of shipment activity, in terms of volume of shipments and expenditures for freight shipments, based upon the domestic freight shipments of hundreds of Cass clients representing a broad spectrum of industries.

In other indicators, the Cass Truckload Linehaul Index declined another 1.8% year over year in June after falling 2.3% and 1.2% in April and May, respectively. This represents four consecutive months of year-over-year declines.  Avondale Partners, who provide the analysis, have further adjusted their pricing forecast range downward (-3% to 1%) for the remainder of 2016, reiterating that several factors continue to contribute to excess capacity: driver pay increases, overall fleet growth, reduction in carrier bankruptcies and an easing of the 34-hour restart rule.

Similarly, the Cass Intermodal Price Index fell another 1.5% year over year in June, representing 18 consecutive months of year over year declines. Historically, there is a "high degree of correlation between truckload and intermodal pricing," say the Avondale Partners analysts. As contract rates for trucking continue to lose strength and move further into negative territory, “[this] would imply even more potential weakness for intermodal pricing.”

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