Shipment volumes and expenditures both continued their decline in January, falling 1.3 percent and 1.9 percent, respectively, from December 2015, according to the latest Cass Freight Index Report.
North American shipment volumes and expenditures continued to fall in January 2016, dipping 1.3 percent and 1.9 percent, respectively, compared with the previous month, according to the latest Cass Freight Index Report.
Although the logistics payment solutions provider said the January declines are “normal seasonal trends and are not necessarily signs of further weakening” of the market, they are still well below the highs seen in mid-2015.
“The economy grew much more slowly in the second half of 2015, so January freight shipments are down 11.6 percent and dollars spent are down 11.5 percent from the June 2015 high,” said Cass.
Cass noted January shipment volumes were relatively flat, down 0.2 percent, while transportation expenditures fell down 1.4 percent compared with the same 2015 period.
“Sequentially, January was the fourth month in a row that the number of freight shipments declined,” it said, attributing much of the decrease in volumes to waning rail traffic cause by a continued slump in commodities markets.
“The continued steep decline in energy prices hurt the railroads on several fronts in January,” said Cass. “First, it caused a dramatic decline in coal shipments, one of their primary commodities, as power generating plants continue to shift to less expensive natural gas. Second, a drop in petroleum and petroleum products shipments as oil mining came to a virtual standstill in the U.S. And third, there has been a loss of shipments of materials used in petroleum extraction.
“Truck tonnage also eroded in January, but not to the same extent as railroads,” it added. “Carriers are reporting that capacity and demand are very well matched right now.”
Year-over-year, overall shipment volumes dropped 3.7 percent in December 2015 after declining 5.13 percent in November, 5.3 percent in October and 1.5 percent in September.
Looking forward to the rest of 2016, Cass said a 0.4 percent increase in the Institute of Supply Management’s PMI Index in January “is a sign that manufacturing may be reawakening.”
“The Institute of Supply Management’s (ISM) monthly PMI Index Report in January showed that although the PMI Index remained below the 50 percent threshold—indicating that manufacturing is contracting—the index rose for the first time in four months…If manufacturing continues to grow—and it should—freight levels will return. Although factory employment has been hit hard by weak exports, job hires were up 29,000 in January.”
The Cass Freight Index is based on domestic freight shipments of hundreds of the company’s clients across a wide variety of industries. Cass Information Systems processes more than $26 billion in annual freight payables.
North American freight market limps into 2016
