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Bigger freight declines in May highlight Cass data surprise

May Cass data pops April freight bottom balloon

Unidentified truck on highway (Photo: Jim Allen/FreightWaves)

The Cass Freight Index saw year-over-year declines widen in May, a result likely worse than many had been expecting.

The shipments component of the index fell 23.6% year-over-year in May, outpacing the 22.7% year-over-year decline reported in April. Freight expenditures dropped 21.2% year-over-year, worse than the 18.2% year-over-year decline reported in the prior month.

Shipments did improve slightly from April – up 1.6% sequentially.

Chart: Cass Freight Index – Shipments; Source: Cass Information Systems and Stifel Financial

“We were surprised not to see more of an uptick; the re-opening schedule appears to have unfolded slower than we anticipated – and also because the freight data reported by some of the public companies (less-than-truckload [LTL] carriers and rails specifically) showed a more significant sequential jump and better year-over-year improvements than Cass showed,” said the report’s author, Stifel Financial (NYSE: SF) equity research analyst David Ross.  


The latest report from payment management solutions provider Cass Information Systems (NASDAQ: CASS) throws a bit of a wet blanket on the April bottom discussion that has taken hold throughout the industry. While sequential improvement in shipments was seen in May, the expenditures component of the index fell 5.7% from April.

Ross classified both shipments and expenditures as remaining at “recessionary levels.” He expects to see improvement in June, “normally the best month of the second quarter,” but cautioned that year-over-year growth was likely going to be delayed. “We do not believe we will reach 2019 freight activity levels until 2021 (at the earliest) due to the significant rise in unemployment and other results of government intervention.”

Noting that there are only two weeks left in the quarter and that most modes – truckload (TL), LTL, intermodal and rail – are seeing double-digit declines, Ross sees a quick recovery as unlikely. “With all the talk about potential shapes the recovery could take, we feel comfortable removing a “V” from that discussion. The long-term effects of sky-high unemployment and 0% interest rates should be quite negative and sufficient this year to suppress any kind of sharp rebound in activity.”

Last week, the Federal Reserve held interest rates steady and indicated that the near-zero interest rate policy may hold through 2022. The central bankers also forecasted GDP to fall 6.5% this year, but moving 5% higher in 2021 with 3.5% growth projected for 2022.


Ross said the fact expenditures were off to a lesser degree than shipments, even as freight rates were lower year-over-year, had more to do with freight mix as length of haul has increased. He also contends that shippers deemed essential during the pandemic “had a higher freight cost per shipment than those who were closed.” Revenue per shipment was up 3.1% year-over-year during May.

Chart: Cass Freight Index – Expenditures; Source: Cass Information Systems and Stifel Financial

Ross believes that comparing similar freight over the same time period would have produced a bigger decline in expenditures than what was reported in shipments.

The TL linehaul index (which excludes fuel and accessorial charges) declined 5% year-over-year in May, less severe than the 7% year-over-year decline recorded in April, which was the worst decline in 15 years. The index increased 0.7% from April.

“We believe the spot market (as well as the contract market) has bottomed and that the rebound in rates will depend on the strength of the recovery coupled with the pinch of industry supply from factors besides just truck production, such as rising insurance costs and limited driver supply,” Ross continued.

Ross said that the linehaul index has a high correlation with the yield metrics reported by publicly traded TL carriers. As such, he expects second quarter 2020 yields to be approximately 5% lower for the group, but noted that there is still a month left in the period.

Cass’ intermodal price index declined 17.8% year-over-year in May and was down 11.9% from April. Intermodal demand has suffered from excess truck capacity, lower spot rates and declines in diesel prices. However, year-over-year declines in intermodal traffic have eased from the mid-teen percentage declines seen earlier in the quarter, posting sequential improvement of late. Twenty-five percent of North America’s intermodal railcar fleet now sits in storage.

“In summary, while the Cass Shipments Index likely bottomed for this cycle in April, May was not as strong as anticipated. June readings should be better and like many other things right now, will depend on how quickly the economy re-opens and how quickly the very high unemployment levels can retreat,” Ross concluded.  

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Todd Maiden

Based in Richmond, VA, Todd is the finance editor at FreightWaves. Prior to joining FreightWaves, he covered the TLs, LTLs, railroads and brokers for RBC Capital Markets and BB&T Capital Markets. Todd began his career in banking and finance before moving over to transportation equity research where he provided stock recommendations for publicly traded transportation companies.