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Rates surge, no ‘significant rate relief’ in 2021, Cass says

Freight expenditures index jumps 19.5% year-over-year in January

Cass Freight Index jumps in January (Photo: Jim Allen/FreightWaves)

Data released Thursday by Cass Information Systems (NASDAQ: CASS) highlighted advances in the company’s shipments and expenditures indexes during January. The shipments component increased 8.6% year-over-year with the expenditures index surging 19.5%.

The data showed shipments improved 3% from December on a seasonally adjusted basis, which was the largest move since September.

“This acceleration takes us another step closer to the strong growth environment which we expect to continue in 2021, due in no small part to easy comparisons,” according to the report’s author, ACT Research’s Tim Denoyer.

Compared to January 2019, the shipments index is still 1.6% lower.

Expenditures, up 2.8% seasonally adjusted from December, grew at a faster rate during the recent month, in large part due to the volume increases. Excluding a few months in 2018, the January grow rate was the fastest pace reported since the 2009 to 2011 period.

“As these higher volumes meet rising contract rates, it is clear that this index is headed for growth rates over the next several months not seen since 2010-2011,” Denoyer added.

The truckload linehaul index, a measure of linehaul rates on a per-mile basis excluding fuel and accessorials, moved 7.3% higher year-over-year in January and 2.3% higher from December. This was the seventh straight month of sequential increases in the index, which is now up 8.1% since June.

The report acknowledged some “slowing in spot rates and consumer spending recently,” but said the capacity dynamic remains tight. “With additional federal stimulus likely to drive more consumer spending; lean inventories; and a long backlog of ships at U.S. ports, we expect the Cass Truckload Linehaul Index to continue to improve in the near-term.”

Implied freight rates, or expenditures divided by shipments, jumped 10.1% year-over-year. The increase shows that freight spend is increasing at a much faster pace than shipment growth. The implied rate has been in positive territory for five of the past six months. TL represents more than half of freight spend in the dataset.

On the capacity front, the report stated that parts and semiconductor shortages, partly due to West Coast port congestion, will impede production at the truck original equipment manufacturers, resulting in further delays delivering the equipment needed to ease capacity constraints.

Looking forward, rate relief does not appear to be on the horizon. “To address a frequently asked question of late, we do not expect 2021 to repeat the significant rate relief shippers experienced in 2019,” 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.

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  1. Stephen Webster

    Many small trucking companies and owner ops went out of business between Oct of 2019 and may of 2020 in Ontario Canada because of very low rates for truck transport. Those companies able to pre buy in in March of 2020 and get wages assistance and big enough to self insure 200 trucks plus are in a very good postion. Many older trucks got scraped and those people have left trucking . Trucking and Uber need min pay rates and min freight rates.

  2. Freight logistics enterprises LLC

    Capacity is totally overwhelmed. Thank goodness the FMCSA extended the Covid Exemption or else rates would be significantly higher from further stains on capacity.
    Expect things to continue to rise as we get closer to april produce season and capacity is extremely short. Carriers are also not willing to reduce rates because they were suppressed for so long prior.

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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.