Recession Watch: Inventory Glut, Iffy Consumer Demand Sink US Freight Volume

BY KCHILD2013 on APRIL 20, 2016 • ( 1 )

From Wolf Street, by Wolf Richter

Worst March, worst first quarter since 2010.

The goods-based economy in the US, largely dependent on the previously irrepressible but now strung-out American consumer, isn’t doing so well. To what extent things have deteriorated shows up in the freight data.

Freight shipments in March fell 1.5% in terms of volume from the already terribly low levels of March 2015, according to the Cass Freight Index. It has been an awful year so far. The index hit the lowest level for any March since 2010. This followed the worst February since 2011 and the worst January since 2010. This is not a blip.

On an average basis, volume in the first quarter fell 3.0% from the same period in 2015: the worst first quarter since 2010!

The Cass Freight Index tracks freight transactions by “hundreds of large shippers,” regardless of mode of transportation, including by truck and rail. It does not cover bulk commodities, such as oil and coal; so the mayhem taking place in those spaces is not reflected in the index. Instead, the index is focused on consumer packaged goods, food, automotive, chemical, OEM, heavy equipment, and retail.

The index is not seasonally adjusted. Hence the strong seasonal patterns in the chart. Note how out-of-whack 2016 (red line) has been so far:

To view the same issue from a dollar perspective: The Cass index for freight expenditures, which tracks the money spent on shipping products, plunged 7% in March from a year ago, on a combination of lower volumes and lower shipping rates. The worst March since 2011! On an average basis, it was the worst first quarter since 2011….