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February weather only temporary impediment to freight cycle: Cass

Expenditures subindex posts new record

Cass data set to accelerate through second quarter (Photo: Jim Allen/FreightWaves)

February data from Cass Information Systems (NASDAQ: CASS) shows the impact winter storms had on freight markets during the month.

February speed bump will give way to larger increases

The shipments subindex increased 4.1% year-over-year, up 1.8% sequentially. The year-over-year growth rate for the month was less than half that recorded in January. On a seasonally adjusted basis, the index came in 3.2% lower sequentially.

“This slowdown reflects both the short-term weather effects and likely longer-lasting supply chain pain points, which are anticipated to slow the industrial recovery for a few months,” according to the report’s author, ACT Research’s Tim Denoyer.

However, Denoyer believes the month will prove to be an outlier.  


“The significant supply side issues will only temporarily belie the strong demand environment and considerable acceleration in freight demand is still most likely,” he continued. Given easy year-over-year comparisons, the index could increase more than 25% in the second quarter, assuming normal seasonality.

Outbound truckload and domestic rail container volumes fell notably during February as severe weather conditions limited or drastically curtailed service throughout many provider networks. But by the end of the month shipments had quickly recovered with truck volumes surging well ahead of levels seen prior to the storms.

Chart: (SONAR: OTVI.USA & ORAILDOML.USA)

Freight spend hits new record

The expenditures index, a measure of total freight dollars spent, posted a new record in the month, up 16.9% year-over-year and 2% higher than January. Seasonally adjusted, the index fell 1.7% sequentially, which was primarily due to declines in shipments.

The spend component outpaced shipments again in the month with implied freight rates, or expenditures divided by shipments, climbing 12.3% year-over-year. The February growth rate was 220 basis points higher than January. The report noted easy comps as the primary reason for the increase in the index as freight rates were still on the decline during February 2020.


On a seasonally adjusted comparison, implied rates ticked slightly higher, following “three straight months of large increases.”

The TL linehaul index, a measure of linehaul rates on a per-mile basis excluding fuel and accessorials, increased 8.1% year-over-year, posting eight straight sequential increases.

Spot rates continue to step higher as contractual bid season moves along. The year-over-year gap in spot rates has widened over the last several weeks. Recent indications from TL carriers suggest contractual rates are increasing higher than the high-single to low-double-digit range originally expected.

Chart: (SONAR: TSTOPVRPM.USA)

Capacity will likely remain tight and keep rates elevated. “Driver demographics are tightening, and the economic stimulus will add more competition for drivers as parts shortages limit truck production in early 2021,” Denoyer added.

Freight expectations looking up

The deceleration in the growth rate of shipments “coiled the spring” for the March freight surge, according to the report. While the March comp has a spending spree from the early days of the pandemic to contend with, current truck volumes are already higher than those levels, albeit aided by a catchup from February’s weather events.

However, the comps are much more subdued during the second quarter due to widespread COVID-related shutdowns last year.

Denoyer expects rail volumes to pick up in intensity, noting a “strong U.S. industrial recovery this year, eventually.” Everything from port congestion to manufacturing supply pinch points and weather have impeded rail traffic so far in 2021. Volumes have picked up in the last two weeks, although not industrial related as intermodal shipments have led the surge.

On parts shortages at the original equipment manufacturers: “Still, this is a temporary issue with the wrinkles likely ironed out by around midyear. It could drag on further, though; and regardless, it will keep capacity tighter for longer than if manufacturers were able produce at their own pace,” Denoyer concluded.


Data used in the Cass indexes is derived from freight bills paid by Cass, a provider of payment management solutions. Cass processes $28 billion in freight payables on behalf of more than 8,000 subscribers annually.

Click for more FreightWaves articles by Todd Maiden.

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.