In The News

Freight Shipments, Payments Increase After Two Monthly Declines

By Evan Lockridge - TruckingInfo.com
Posted Oct 14th 2015 1:38PM

Freight shipments and payments rose in September following two straight monthly declines, according to the latest Cass Freight Index.

Shipments increased 1.7% while expenditures improved 2.4% from August, but were still down from a year earlier. Shipments fell 1.5% while expenditures showed a 6.6% decline.

The increase in shipments was expected and part of the usual holiday season increase, which coincides the higher freight payments, according to Rosalyn Wilson, supply chain expert, and senior business analyst with the management services firm Parsons, who provides analysis for the report.

"Spot prices have been lower because of adequate capacity during the slowdown in August," Wilson wrote in the report. "Trucking companies are holding rate increases down, and offering capacity guarantees in exchange for higher rates. There has also been a steady growth in dedicated carriage agreements. We expect rate increases for the trucking sector to be modest through the end of the year."

Wilson said many factors are affecting the current volume of freight, not the least of which is mounting inventory levels.

"All business inventories are continuing to grow, as are inventory‐to‐sales ratios, indicating that we are not at optimal levels given inventory turnover rates," she said. "Low interest rates, favorable import prices and moderate storage costs have encouraged the buildup, but even a one percent rise in interest rates could fuel a 2.3% rise in total logistics costs at current inventory levels."

Wilson noted with the Federal Reserve choosing not to raise interest rates at its recent meeting, but not ruling out an increase prior to year‐end, the potential for an uptick in consumer spending and a drawdown in inventory levels is uncertain.

Data within the Cass Freight Index includes all domestic freight modes and is derived from $26 billion in freight transactions processed by Cass Information System annually on behalf of its client base of hundreds of large shippers.

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