June freight shipments and expenditures see further declines, notes Cass Freight Index

Freight shipment and expenditure readings again saw declines in June, according to the new edition of the Cass Freight Index, which was recently issued by Cass Information Systems.

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. What’s more, the Cass Transportation Indexes accurately measure changes in North American freight activity and costs based on $44 billion in paid freight expenses for the Cass customer base of hundreds of large shippers.

June’s shipment reading—at 1.147—was down 4.7% annually and down 1.6% compared to May. It also trailed August 2022’s 1.278 reading, which marked the highest level for shipments since May 2018. On a two-year stacked change basis, March shipments were down 6.8% and down 1.9% on a month-to-month seasonally adjusted (SA) basis.

“The dynamics of the freight market continue to shift, leading us into the late phase of the freight cycle,” wrote the report’s author Tim Denoyer, ACT Research vice president and senior analyst. “Shippers are in a position of power, with rates still falling and near bottom. In the next phase, the balance will begin to shift.”

And he added that freight markets continue to work through a downcycle, which featured its first annual decline 18 months ago, with the past three downcycles ranging from 21-to-28 months.

“Declining real retail sales trends and ongoing destocking remain the primary headwinds to freight volumes, but dynamics are shifting as real incomes improve and the worst of the destock is in the rearview,” he noted. In seasonally adjusted terms, the index is now 12% below the December 2021 cycle peak, slightly greater than the peak-to-trough declines in two of the three downcycles in the past dozen years.”

June expenditures—at 3.520—saw a 24.5% annual decline, steeper than May’s 15.7% decline, and were off 2.6% compared to May. On a two-year stacked-change basis, May expenditures were down 5.7% and were down 2.8% on a month-to-month seasonally adjusted basis.

“The expenditures component of the Cass Freight Index rose 23% in 2022, after a record 38% increase in 2021, but is set to decline about 17% in 2023, assuming normal seasonal patterns from here,” observed Denoyer. “With both freight volume and rates under pressure at this point in the cycle, that assumption is likely optimistic, so we may be looking at a ~20% decline in freight spending this year.”