After offering a glimmer of "less bad" hope in August, the Cass Freight Index shipments data in September disappointed, providing hindsight that August offered “false hope,” according to the monthly analysis from Cass Information Systems Inc.
“September data is once again signaling that overall shipment volumes (and pricing) continued to be weak in most modes, with increased levels of volatility as all levels of the supply chain (manufacturing, wholesale, retail) continue to try and work down inventory levels,” writes report author Donald Broughton, managing director at Avondale Partners.
He also noted there have been a few areas of growth, mostly related to e-commerce, with some expansion for carriers serving the auto and housing/construction industries.
Still, it added up to lower shipment volume in September compared to last year, marking the 19th straight month of year-over-year decline.
“Bottom line, the Industrial Recession in the U.S. that began in March of 2015 continues to weigh on overall volumes,” Broughton says.
Cass Freight Index expenditures (or the total amount spent on freight) was up 5.2% sequentially, and the year-over-year rate of contraction appeared to be ‘less bad’ as it only contracted 3.8% (much less than in May, June, July, and August). However, that increase was tied more to the rising price of fuel over the last six months and not the increase in pricing power of any single mode, the report notes.
Rail volumes remained weak in September, based on fewer exports and less domestic manufacturing, while the lower price of diesel drove domestic intermodal loads off the rail back to over-the-road truck. For trucking, volumes were mixed, as tonnage continued to be slightly positive and load volume continued to be slightly negative.
Similarly, the Cass Truckload Linehaul Index decreased 3.5% year over year in September, representing seven consecutive months of year-over-year declines. According to analysts at Avondale Partners, softening demand and increasing capacity warrant a pricing forecast of -3% to 1% through mid-2017. Avondale also referenced other factors providing downward pricing pressure including carrier bankruptcies at historic lows, truck counts up by single digits, and the relaxation of the of the 34-hour restart rule.