December Cass Index report shows signs of improvement but points to slow Q4 growth overall

Following two straight months of declining freight shipments and expenditures, the December 2011 edition of theCass Freight Indexinched closer to positive territory.

This index accurately measures trends in North American shipping activity based on $17 billion in paid freight expenses of more than a hundred of America’s largest shippers, according to Cass officials.

12月出货在1.056相比持平November and up 0.7 percent annually. Shipments exceeded the 1.0 mark for the 19th straight month since May 2010, when shipments moved above the 1.0 mark for the first time since November 2008. November was the only month in 2011 that same month shipments were lower annually.

Expenditures at 2.272 were up 1.8 percent compared to November and up 18.8 percent compared to December 2010, which is roughly half of what annual expenditures comparisons have been in previous months prior to August, which was up 15.8 percent annually, with January through July averaging 30.9 percent annual increases for expenditures.

As LM has reported, many trucking industry 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.

Rosalyn Wilson, senior business analyst at Delcan Corporation and author of the Annual State of Logistics Report published by the Council of Supply Chain Management Professionals, said in her analysis of the report that the fourth quarter was “very weak,” as freight volumes dipped 12 percent from the third quarter, representing a much larger seasonal decrease than is seasonally normal.

And with shipments up less than one percent in December, Wilson noted that the “astounding” 18.8 percent gain in expenditures can be attributed to increased rates as opposed to volumes. Drivers she cited for this include: steadily climbing railroad rates by as much as 15 percent and a 4 percent—on average—gain for trucking rates, with more increases expected in 2012 while the capacity situation is expected to remain tight.

What’s more, she stated that ongoing cost pressures for the trucking industry are likely to remain intact, due to pressures from labor and fuel and regulations that are consuming a large portion of trucking revenues.

And an improving holiday sales season did not materially improve freight activity, according to Wilson.

“Although holiday sales were somewhat higher than last year, they did not translate into freight movements because retailers had restocked earlier in the year,” wrote Wilson. “With high inventory levels going into the holiday season and consumers holding off on purchasing, retailers did not place new orders or replenish their inventories.”

Despite the host of challenges at the moment, shippers and carrier have told repeatedly told LM things remain stable for the most part, given the current headwinds of increasing fuel costs, regulatory red tape for multiple modes, and a difficult time finding available drivers for motor carriers, which has in turn created some problems for shippers in securing capacity.

Looking back at 2011, Wilson observed that it remains clear that the freight transportation market will continue to face more than its fair share of challenges, including low consumer spending, and high unemployment, among others. On the more positive side are strong U.S. export growth and strong levels of business spending.

Morgan Stanley analyst William Greene wrote in a research note that even with some slight growth in the December Cass report, “it’s too early to make the call that domestic truck trends are on the mend post their end of 2011 slowdown,” explaining that despite showing seasonal strength in December, the fourth quarter was still a seasonally weak quarter.