Cass Freight Index report highlights ongoing strength of freight economy

The most recent edition of the Cass Freight Index Report from Cass Information Systems continued to point to a very strong freight economy, with both freight shipments and expenditures finished the first half of 2018 in strong fashion. 

Many freight transportation and logistics executives and analysts consider the Cass Freight Index to be the most accurate barometer of freight volumes and market conditions, with many analysts noting that the Cass Freight Index sometimes leads the American Trucking Associations (ATA) tonnage index at turning points, which lends to the value of the Cass Freight Index.

Through June, the most recent month for which data is available, freight shipments and expenditures have now seen annual gains for 21 and 18 months, respectively, the report said.

“From both a volume and pricing perspective, the U.S. freight economy continues to be extraordinarily strong….[and] are clearly signaling that the U.S. economy, at least for now, is ignoring all of the angst coming out of Washington, D.C. about the trade war,” wrote the report’s author Donald Broughton, founder of Broughton Capital.

“Despite concerns coming out of Wall Street about the increased threat of inflation or the continued increase in interest rates, these indices are displaying accelerating strength on top of increasingly difficult comparisons. Demand is exceeding capacity in most modes of transportation by a significant margin. In turn, pricing power has erupted in those modes to levels that continue to spark overall inflationary concerns in the broader economy.”

June freight shipments, at 1.247, were up 7.2% annually and down 4.6% compared to May.

Broughton explained that the first six months of 2018 have clearly signaled that barring a negative “shock event,” 2018 will be an exceptionally strong year for transportation and the economy, adding that June, May, April, and March exceeded all levels attained in all in all months in 2014, which he said was a strong year, with February, at 1.198, equal to the peak month of June, at 1.201. 

What’s more, he pointed out that the annual gains in shipments are notable because typically there are only high percentage gains in volume when matched up against easy comparisons.

“That these percentage increases are so strong and strong against tough comparisons explains why our outlook is so bullish, why capacity is so constrained and why realized pricing is so strong,” Broughton said.

June expenditures, at 2.894, saw a 15.9% gain over June 2017 and a 0.7% increase compared to May.

“With the recent strength in demand, it follows that the Cass Freight Expenditures Index also posted strong percentage increases throughout 2017, and that has continued into early 2018,” commented Broughton. “[W]e have to go back to the easy comparisons of 2009-2010 to find such large percentage increases and the current comparison is anything but easy.

“We have commented repeatedly that this was indicative of an economy that is continuing to expand. June’s 15.9% increase clearly signals that capacity is tight, demand is strong, and shippers are willing to pay up for services to get goods picked up and delivered in all modes throughout the transportation industry.”