Freight Index Disappoints After Offering ‘False Hope’
After offering a glimmer of “less bad” hope in August, one measure of freight shipments data in September disappointed — although there are a few areas of growth.
Turns out that September report was “false hope,” says the author of the monthly Cass Freight Index Report, Donald Broughton, who’s managing director, chief market strategist and senior transportation analyst at the investment firm Avondale Partners.
“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 and retail – continue to try and work down inventory levels,” said Broughton.
“That said, there have been a few areas of growth, mostly related to e-commerce, with lower levels of expansion being experienced in transit modes serving the auto and housing/construction industries.”
In the Cass Freight Expenditures Index, expenditures (the total amount spent on freight) were up month-over-month in August, and the year-over-year rate of contraction appeared to be ‘less bad’ than the rates in May, June, July, and August.
In September, however, index measurements for freight shipments and expenditures fell 3.1% and 3.8%, respectively, compared to a year ago. It was the 19th straight month of shipment declines. Shipments dropped 0.4% last month from August. Expenditures rose 5.2% month over month, but Broughton said this was the result of the steady increase in the price of fuel over the last six months and not an increase in pricing power.
Broughton said continued weakness in freight movements is being driven by the excess of capacity in most modes, whether you’re talking about trucking, rail, air freight, barge, ocean container or bulk.
“Although at first blush it appears that in most modes the gap between spot pricing and contract pricing appears to be closing slightly, this is more a …Read the rest of this story
