May freight shipments and expenditures see annual declines, says Cass Freight Index

Freight shipment and expenditure readings again saw declines in May, according to the new edition of the Cass Freight Index, which was recently issued by Cass Information Systems.

Many freight transportation and logistics executives and analysts consider the Cass Freight Index to be the most accurate barometer of freight volumes and market conditions, with many analysts noting that the Cass Freight Index sometimes leads the American Trucking Associations (ATA) tonnage index at turning points, which lends to the value of the Cass Freight Index. What’s more, the Cass Transportation Indexes accurately measure changes in North American freight activity and costs based on $44 billion in paid freight expenses for the Cass customer base of hundreds of large shippers.  

May’s shipment reading—at 1.166—was down 5.6% annually and up 1.9% compared to April. April was 1.0% below March, which was down 1.0% compared to February, and February was down 0.3% compared to January’s 1.124 reading. That was preceded by a 3.9% annual increase in December, a 0.4% November decrease and a 3.9% annual gain in December. It also trailed August’s 1.278 reading, which marked the highest level for shipments since May 2018. On a two-year stacked change basis, March shipments were down 8.1% and down 0.8% on a month-to-month seasonally adjusted (SA) basis.  

“Moving along in the freight downcycle that began in January 2022, we appear to be close to the bottom,” wrote the report’s author Tim Denoyer, ACT Research vice president and senior analyst. “Freight volumes have been negative vs previous year in six of the last seven months. Rates have been negative (y/y) for six consecutive months.”

Denoyer added that the past three downcycles have ranged from 21-to-28 months. 

“Declining real retail sales trends and ongoing destocking remain the primary headwinds to freight volumes, but dynamics are shifting as real incomes improve and the worst of the destock is in the rearview,” he noted. “With normal seasonality, this index would rise slightly m/m in June and still decline about 3% y/y.”

May expenditures—at 3.614—saw a 15.7% annual decline and were down 6.8% compared to April. On a two-year stacked change basis, expenditures were up 7.5% and were down 7.5% on a month-to-month seasonal basis.

Denoyer explained that he expenditures component of the Cass Freight Index rose 23% in 2022, after a record 38% increase in 2021, but is set to decline about 16% in 2023, assuming normal seasonal patterns from here.

“With both freight volume and rates under pressure at this point in the cycle, that assumption could be optimistic, so we may be looking at a ~20% decline in freight spending this year,” he said.