June Cass Freight Index report is up from May but recovery is still slow moving

Even though freight volumes have somewhat flattened out, the most recent release of theCass Information Systems Freight Indexpointed to growth in June from May and on an annual basis, too.

The June report showed that shipments at 1.165 were 4.9 percent better than May, and shipments were above the 1.0 mark for the 13th straight month going back to May 2010, when it topped 1.0 for the first time since November 2008. On an annual basis, June shipments were up 5.3 percent, which is below the 9.6 percent and 12.3 percent year-over-year gains from May and April, respectively.

June expenditures at 2.423 were 4.6 percent ahead of May and up 26.3 percent compared to June 2010. May’s annual hike was 29.6 percent.

As LM has reported, many trucking industry executives and analysts consider the Cass Freight Index as 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 analyst with Declan Corporation, wrote in the monthly Cass report that although growth has picked up, this is not a reversal of the economic slowdown we have seen develop over the last two months.

“Instead, the increase in freight activity is due in part to two events in the global market,” she wrote. “First, manufacturing facilities whose production was disrupted by the disasters in Japan have recovered – and they are producing at a higher level than before to fill backorders. Global orders that were placed months ago are now being fulfilled. Secondly, the declining dollar on the world market has caused an uptick in exports, which has also fueled some of the growth in shipments.”

Wilson made it clear that it will be a while the economy truly recovers, explaining that the economy has not changed course from the lower growth scenario expected for the rest of 2011 and into 2012.

She noted that trucking companies are reporting more competition for loads in most markets, although there are some high volume markets that are reporting capacity constraints and less give on rates. And she also pointed out that another indicator of lower truck shipment volumes is the number of loads being advertised for bids on load boards.

“发货人知道当有点能力more abundant they can do better with spot prices,” Wilson wrote. “Railroads are reporting continued growth in intermodal, particularly ocean containers, and a flatter trend for carloadings. The rise in fuel surcharges as trucking companies try to recoup higher fuel costs has made rail more attractive and bolstered intermodal traffic. Lower fuel prices loosened consumer’s wallets and retailers reported a slight uptick in same store sales although none are expecting this to be a continued trend.”

This type of sentiment was also made clear at last month’s eyefortransport 3PL Summit in Atlanta, with shippers indicating that while volumes are somewhat steady, the overall pace of the recovery has waned in recent weeks and demand has flattened heading into the summer months.

佩里诺埃尔,功能处理量的同事的人aging Director and Senior Consultant, said in a recent interview there are two things to consider when looking at the Cass data and the state of the economy.

“Recoveries always have soft patches,” he said. “We have never had a recovery that did not last longer than this one, except in 1982 when the [White House] raised interest rates dramatically to create a recession. The second thing is that this pause is completely predictable. This is because of the increase in fuel prices and the dramatic slowdown in Japanese manufacturing, which has kicked off a global manufacturing slowdown.”

But in both of these cases, Perry said the negatives are temporary, as the Japanese manufacturing sector has begun to expand again, with Toyota already back to 90 percent production. He explained there are various reasons for the economy to expand in the second half, saying the current situation is an exercise in nerve in several respects, with no reason to panic.