Latest Freight Shipment, Spending Levels Show Economic Uncertainty
Freight shipments across all U.S. domestic modes continued improving in August but remain weak, according to the latest Cass Freight Index, while freight spending moved lower again with both resulting in mixed feelings when it comes to their economic impact.
Its measure of shipments increased 0.4% compared to July for a reading of 1.115, the highest level since last September, but is down 1.1% from August 2015, the 18th straight year-over-year decline.
According to the report, this most recent activity is mostly related to e-commerce, with lower levels of expansion being experienced in transit modes serving the auto and housing/construction industries. Also the increase in the month-over-month performance offers “a glimmer of hope that the contraction in volumes may be getting closer to an end.”
Figures also show freight spending declined during August, 3.3% from the month before and fell an even larger 6.3% from August 2015 for an index reading of 2.278, its lowest level since January.
“We continue to see this weakness as driven by the excess of capacity in most modes: trucking, rail, air freight, barge, ocean container and bulk,” said Donald Broughton managing director, chief market strategist and senior transportation analyst at the investment firm Avondale Partners, who provides analysis in the report. “The weakness is also driven in part by the ongoing decline in diesel and jet fuel and corresponding fuel surcharges that influence pricing realized by shippers.”
He says the August increase in freight volume certainly wasn’t driven by railroads, as carloads and intermodal shipments both declined, while tonnage moved by trucking appears to be growing, though it’s still down on a year-over-year basis.
Broughton says when it comes to freight rates in August, at first blush it appears that in most modes the gap between spot pricing and contract pricing appears to be closing slightly, but rather this is …Read the rest of this story
