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    -228.060
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    0.000
    0%
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    19.000
    13.6%
  • DATVF.ATLPHL
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  • OTRI.USA
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    -0.840
    -4.6%
  • OTVI.USA
    11,613.050
    -228.060
    -1.9%
  • TLT.USA
    2.670
    0.000
    0%
  • WAIT.USA
    159.000
    19.000
    13.6%
NewsTruckload

Cass freight data declines again in November

Year-over-year Cass Freight Index declines moderating, linehaul rate declines accelerating

The Cass Freight Shipments Index fell 3.3% year-over-year in November, marking one full year of year-over-year declines.

This was the first report published under new author, equity research analyst David Ross with Stifel Financial Corp. (NYSE: SF), who referred to the decline as “less bad” compared to recent results including October, when the decline approached 6%.

The report called out retail inventory destocking and a soft industrial economy as the primary reasons for the current “freight recession,” which is producing weaker shipments. Ross said he expects volumes to begin to level in 2020.

Cass Freight Index (Shipments) – SONAR: CFIS.USA

“Over the coming months, expect [year-over-year] growth to flatten out, as the industrial economy is expected to bottom, while the consumer remains relatively healthy,” Ross said.

He contends that the shipments index could see positive year-over-year comparisons as early as January 2020.

The Cass Freight Expenditures Index, which represents amounts spent to move freight, declined 1.4% year-over-year in November. This was the lowest decline reported since the July 2019 report, which was off by the same amount.

Cass Freight Index (Expenditures) – SONAR: CFIE.USA

Ross said the fact that the shipments index fell by more than the expenditures index implies pricing is higher on a year-over-year basis.

“The fact that average spend per unit is up may sound strange, given the sharp drop in spot truckload rates in 2019 vs. 2018, but most shippers move freight through the contract market, which necessarily lags any big changes in supply/demand. Therefore, many contracts that were repriced in 2018 still carried into and through much of 2019,” Ross added.

He explained that the Cass Freight Index represents multiple modes of transportation, including modes that have seen pricing power in 2019 like rail, intermodal, parcel and less-than-truckload (LTL).

Ross expects pricing growth to increase in 2020 at moderate levels as freight expenditures “modestly outpace a generally flattish volume environment.” 

Along those lines, the Truckload (TL) Linehaul Index, which measures fluctuations in the linehaul portion of dry van TL shipments on a per-mile basis, declined 3.5% year-over-year in November. This was the fourth consecutive monthly year-over-year decline and the largest in the current cycle. Ross believes that the industry has “a couple more quarters of downward rate pressure ahead due to soft demand and excess supply.” He noted a strong correlation between pricing metrics provided by publicly traded TL carriers and this linehaul index, which doesn’t bode well for the fourth quarter of 2019.

Cass Truckload Linehaul Index – SONAR: CTLI.USA

“Presently, going off this data and from conversations we’ve had with several carriers this past week, we see [fourth quarter 2019] as a soft quarter for both pricing and volumes among trucking companies,” Ross said.

However, the report pointed to the potential for a change in the current oversupply of truck capacity in the TL markets, highlighting potential headwinds to capacity like the final conversion to electronic logging devices (ELDs), the Drug & Alcohol Clearinghouse and rising insurance costs. However, Ross noted, if capacity isn’t reduced, “TL rates should remain fairly stable in 2020.”

Lastly, the Cass Intermodal Price Index came in 2.8% higher year-over-year for the month. Excess capacity in the TL market has resulted in downward pressure on intermodal loads and pricing. The report stated that when TL pricing recovers, intermodal pricing will be even stronger.

Cass Intermodal Price Index – SONAR: CIPI.USA

In addition to announcing Ross as the new author of the report, Cass previously announced a new partnership with the Global Supply Chain Institute at the University of Tennessee, Knoxville’s Haslam College of Business, in efforts to improve the methodology it uses to generate both the truckload (TL) and intermodal indexes.

The data used in the Cass indexes is derived from freight bills paid by Cass Information Systems, a provider of payment management solutions, which processes more than $28 billion in freight payables on behalf of its clients annually.

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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.

4 Comments

  1. I don’t like the “change” in the new report . Why change and render something mediocre in comparison to the way it was ?

    Change doesn’t always equal improvement .

    In my humble opinion ………..

  2. What has occurred in Canada in November ?

    Quote :

    Canada’s spot market strengthened in November

    TORONTO, Ont. – Loads were up and truck availability was down on Canada’s spot market in November, according to data from TransCore Link Logistics.

    The company says loads got a lift from the holiday shopping season, and that the Toronto and Montreal markets were particularly strong. Average daily load postings on Loadlink increased 11% from October, and were just 3% below November 2018 levels.
    Inbound loads from the U.S. were up 14%, while intra-Canada loads climbed 6%.

    “The increase in inbound cross-border loads could have been a result of brokers pulling freight forward to utilize available capacity prior to the American Thanksgiving weekend when capacity contracts due to less available drivers,” TransCore said in a release. “The workers’ strike from a large national rail service provider in Canada may have also released additional loads onto the Canadian spot market for the short duration of the striking period.”

    Improved intra-Canada performance was attributed to the Toronto and Montreal markets. There were 18% more loads originating from Quebec and 20% more loads destined for Ontario. The Toronto-Montreal lanes saw an average monthly increase in load volumes of 116%. There was also strength in Western Canada, with Winnipeg-Saskatoon volumes up 98%, and Calgary-Kelowna up 108%.

    Equipment postings dropped 11%, while the daily average number of truck postings fell 7%. But capacity was up 4% year-over-year. The truck-to-load ratio dropped 17% to 3.43 trucks per load, compared to 4.11 in October. Year-over-year, the ratio is up 7%, from a 3.20 trucks-to-load ratio in November 2018.

    TransCore said early signs point to a strong December for load volumes, with average daily load volumes up 36% compared to early November.

    “This may continue into the second week of December during the Christmas shopping season,” the company suggested.”

    End quote .

    RE-QUOTE !

    “Improved intra-Canada performance was attributed to the Toronto and Montreal markets. There were 18% more loads originating from Quebec and 20% more loads destined for Ontario. The Toronto-Montreal lanes saw an average monthly increase in load volumes of 116%. There was also strength in Western Canada, with Winnipeg-Saskatoon volumes up 98%, and Calgary-Kelowna up 108%.”

    Now how could this be ??? Could it be due to this time of the year where demand tends to increase somewhat ? But ,but , but , how can spot rates be increasing if supposedly “foreigners” are the reason for rates declining ? Have they all left the Country ? ROTFLMAO ! And what’s going on with the hypothesis about foreigners being the overcapacity culprit ??? LOADS PER TRUCK HAVE INCREASED ! SPOT RATES HAVE INCREASED !

    Beware of the BS you tend to allow yourselves to believe .

    Re-quote :

    “The Toronto-Montreal lanes saw an average monthly increase in load volumes of 116%.” !

    Oh my , now that certainly refutes the foreigner hocus pocus hypothesis doesn’t it , LOL ! Shopping season(demand) sees no ethnicity , but when demand curtails , some of YOU do ! Tsk , tsk , tsk

    In my humble opinion …………….

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