• DATVF.ATLPHL
    1.814
    0.044
    2.5%
  • DATVF.CHIATL
    2.034
    0.018
    0.9%
  • DATVF.DALLAX
    0.921
    0.071
    8.4%
  • DATVF.LAXDAL
    1.502
    -0.092
    -5.8%
  • DATVF.SEALAX
    0.962
    -0.053
    -5.2%
  • DATVF.PHLCHI
    1.091
    -0.038
    -3.4%
  • DATVF.LAXSEA
    2.146
    -0.004
    -0.2%
  • DATVF.VEU
    1.647
    0.009
    0.5%
  • DATVF.VNU
    1.471
    -0.010
    -0.7%
  • DATVF.VSU
    1.211
    -0.011
    -0.9%
  • DATVF.VWU
    1.554
    -0.028
    -1.8%
  • ITVI.USA
    9,689.350
    14.490
    0.1%
  • OTRI.USA
    7.650
    -0.020
    -0.3%
  • OTVI.USA
    9,678.010
    13.740
    0.1%
  • TLT.USA
    2.730
    0.000
    0%
  • WAIT.USA
    156.000
    -2.000
    -1.3%
  • DATVF.ATLPHL
    1.814
    0.044
    2.5%
  • DATVF.CHIATL
    2.034
    0.018
    0.9%
  • DATVF.DALLAX
    0.921
    0.071
    8.4%
  • DATVF.LAXDAL
    1.502
    -0.092
    -5.8%
  • DATVF.SEALAX
    0.962
    -0.053
    -5.2%
  • DATVF.PHLCHI
    1.091
    -0.038
    -3.4%
  • DATVF.LAXSEA
    2.146
    -0.004
    -0.2%
  • DATVF.VEU
    1.647
    0.009
    0.5%
  • DATVF.VNU
    1.471
    -0.010
    -0.7%
  • DATVF.VSU
    1.211
    -0.011
    -0.9%
  • DATVF.VWU
    1.554
    -0.028
    -1.8%
  • ITVI.USA
    9,689.350
    14.490
    0.1%
  • OTRI.USA
    7.650
    -0.020
    -0.3%
  • OTVI.USA
    9,678.010
    13.740
    0.1%
  • TLT.USA
    2.730
    0.000
    0%
  • WAIT.USA
    156.000
    -2.000
    -1.3%
American ShipperIntermodalShippingTrade and Compliance

North American freight market shows positive momentum in January

Shipment volumes for the month fell 6.4 percent from December due to “normal seasonality,” but were up 3.2 percent compared with the same 2016 period, the second year-over-year increase in as many months, according to the latest Cass Freight Index Report.

Source: Mascha Tace / Shutterstock
Shipment volumes and payments in January were up 3.2 percent and 4.3 compared with the same 2016 period, according to Cass.

   The North American freight market continued to show signs of positive momentum in January 2017, with volumes registering the second year-over-year increase in as many months after slipping back into negative territory in November 2016, according to the latest Cass Freight Index Report.
   Shipment volumes in January fell 6.4 percent from the previous month due to “normal” seasonal trends, but were up 3.2 percent compared with the same 2015 period following a similar 3.5 percent year-over-year increase in December. The December increase followed a decline of 0.5 percent in November and an October in which shipment volumes stemmed a 20-month free fall, registering their first year-over-year growth since March 2015.
   Donald Broughton, an economist with Avondale Partners and author of the report, said the continued growth in January suggests the October increase was more than just a blip on the radar.
   “The 3.2% increase in the January Cass Shipments Index is yet another data point which strongly suggests that the first positive indication in October may have indeed been a change in trend,” said Broughton. “In fact, it now looks as if the October index, which broke a string of 20 months in negative territory, was one of the first indications that a recovery in freight had begun in earnest.
   “Data is suggesting that the consumer is finally starting to spend a little, and that with the surge in the price of crude (back above $50 in October), the industrial economy’s rate of deceleration first eased and then began a modest improvement led by the fracking of DUCs (drilled but uncompleted wells), especially in the fields with a lower marginal production cost (i.e., Permian and Eagle Ford),” he added.
   Freight expenditures for the month slipped 0.3 percent compared with December, but grew 4.3 percent from 2016 levels, the first year-over-year growth in 22 months. Shipping payments contracted 3.8 percent from the previous year in September, 3.8 percent in October, 4.5 percent in November, and 3 percent in December.
   Broughton noted the improvement came against an “easy comparison” in January 2016, when expenditures fell to a five-year low due to weak demand and a monumental drop in crude oil prices to below $30 a barrel. He said the increase can be attributed primarily to a steady rise in the price of fuel, as well as “some improvements” in pricing power of trucking and intermodal carriers.
   According to Broughton, a fundamental rule of marketplaces is that “volume leads growth,” meaning that shipment volumes generally increase in advance of pricing.
   “How fast will the recovery be from here? That is yet to be seen,” he said. “However, the overall freight recession which began in March 2015 appears to be over.”
   December volumes were driven by “outstanding” growth in e-commerce parcel shipments, with FedEx and UPS reporting “strong” U.S. domestic volumes, the logistics payment solutions provider said.
   Airfreight volumes in December (the most recent month for which data is available) also showed improvement, up 13.2 percent in the Asia Pacific and 5.7 percent in the Europe Atlantic trade lane, following respective increases of 7.8 percent and 3.4 percent the previous month, according to Avondale’s proprietary air cargo index.

   Rail volumes in the last two years have contributed to the overall decline in the North American fright market, but have become “increasingly less bad,” and in recent weeks have actually turned slightly positive, albeit against a “very easy comparison,” said Broughton. According to data from the Association of American Railroads (AAR), U.S. Class I railroad traffic, which has fallen in 92 of the last 104 weeks, grew 2.9 percent for carload but fell 1.8 percent for intermodal in January after an 11.2 percent increase in December.
   U.S. rail volumes have suffered from a combination of declining prices for energy commodities like coal and oil, a strong U.S. dollar and weak domestic industrial production driving fewer exports, but the latest data “suggests that the higher price of crude (WTI over $53 as we write this) is driving increased activity in oil and gas exploration, as companies with DUCs are choosing to proceed with fracking operations,” he added.
   “Just as the dramatic drop in fracking led us into the industrial recession in March 2015, it now appears to be in the early stages of leading us out,” he said. “Bottom line, rails may not serve as a drag to the overall Cass Freight Shipments Index in coming months, but instead are starting to be a positive.”
   The trucking industry has provided mixed results of late, as tonnage seems to be growing, but loads contracted in four of the last six months in 2016, according to the report.
   “No matter how it is measured, the data coming out of the trucking industry has been both volatile and uninspiring,” said Broughton.
   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.

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