January Cass Freight Index begins 2016 with declines

By Jeff Berman, Group News Editor
February 12, 2016

The January edition of the Cass Freight Index Report from Cass Information Systems picked up where 2015 left off, with both shipments and freight transportation expenditures continuing to show declines on both a sequential and annual basis. 

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.

On the freight shipments side, Cass reported that January shipments––at 1.025––trailed December by 1.3 percent and January 2016 by 0.2 percent. These declines were less than the 4.9 percent drop from November to December, though, and January shipments still topped the 1.0 mark for the 65th straight month in December.

Cass said that the 0.2 percent annual shipment decline for the month of January is essentially flat, but was also the fourth straight month shipments fell. The report explained that this figure reflects ongoing freight railroad carload declines and some intermodal declines, too, citing “soft economic conditions in the U.S. and globally.” Cass said that the ongoing steep decline in energy prices has hindered railroad productivity in the form of coal shipment declines, as well as a drop in petroleum and petroleum product shipments, with oil mining basically at a standstill. On the trucking side, Cass said that even though tonnage fell in January it was not to the same degree as the railroads have experienced, coupled with Cass’s observation that trucking capacity and demand are well matched at the moment.

Expenditures––at 2.301 in January––fell 1.9 percent compared to December and 1.4 percent annually, marking the fourth straight month of declines. The report explained that the January decrease is low in comparison to the 5.7 percent decline from December 2014 to January 2015 and the 5.1 percent decline from December 2013 to January 2014. And it said the reason for that was due to the drop in shipments and mix of commodities moved as well.

Cass said that the current batch of data for freight shipments and expenditures have been in what it said is a typical seasonal decline going back to September 2015, adding that the declines seen during the fourth quarter and January should be viewed as normal seasonal trends and not necessarily signs of further weakening.

In her analysis of the January Cass data, Rosalyn Wilson, senior business analyst with Parsons, and former author of the annual CSCMP State of Logistics report and contributor to the Cass report, explained that while manufacturing data from the Institute for Supply Management has been contracting the last four months but showed signs of heading back towards growth in January. And she also pointed to unemployment declining to 4.9 percent along with a 0.5 percent boost in average hourly wages in January.

“This, coupled with the growth of wages in the second half of 2015, should increase consumer spending, giving the economy another boost,” Wilson wrote. “Wages have grown more in the last six months than in any other time since the recovery began six months ago. The number of new jobs created in January was much lower than in December, but much of this is due to the hiring of seasonal workers.” 

Even with some tempered optimism from Wilson, many supply chain stakeholders remain lukewarm at best in terms of short-term growth, given things like still-high inventories, cautious consumer spending, and regulatory drag that has the potential to stall out freight flows to a certain degree.