Freight shipments and expenditures fall in March with further declines expected, says Cass

The most recent edition of the Cass Freight Index Report issued this week by Cass Information Systems mostly annual and sequential declines gains for March freight shipments and expenditures.

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.

March shipments—at 1.087—fell 9.2% annually and eked out a 0.2% increase compared to February. This reading was just shy of January’s 9.4% annual slide, which was its largest annual decline going back to 2009. 

The report’s author, David Ross, transportation analyst at Stifel, wrote that shipments showed sequential gains for the second straight month, in March, since bottoming in January. But April does not look as positive, as he explained that it will undoubtedly be worse and likely the worse month in a long time.

“There has been a clear divide between winners and losers of these shut-in orders with demand for groceries, home improvement, e-commerce, and consumer staples increasing, while restaurant, auto, and (mall) retail falling to practically zero volume,” he wrote.

The report added that April should rival early 2009, in terms of expecting low volumes.

Ross observed that a key metric to watch for freight demand is inventory levels, while noting that the latest data is too old to be meaningful given the current environment.

“Some shippers have inventory filling up warehouses, others have it sitting in ocean containers not even being unloaded, and still others have nearly empty warehouses, because they can’t keep any inventory due to the high demand that causes freight to flow through the system as soon as it’s produced,” stated Ross. “Coming out of the period, some will need to restock, and some will need to destock. Where that balances out is hard to tell.”

March freight expenditures—at 2.651—fell 8.2% annually and are down 1% compared to February.

“The gap between volume and spending comps continues to close, as pricing has been adjusted lower in the truckload market,” wrote Ross. “We expect transport pricing growth to stay soft this month and next, but we’re watching capacity exits and a potential re-stocking event to drive rates higher again later this year.”