2013 Freight Expenditures Up, Shipments Down, 2014 Picture Brightens
Freight performance was a bit of a mixed bag in 2013 according to Cass Freight Index, with expenditures up 1% and shipments down 3.2%.
The research group characterized the year’s North American freight as “mediocre,” a period in which “inventories remained high <and> manufacturing stalled.”
All of this contributed to “another bumpy year in the recovery that hasn’t quite gotten there.” Freight volumes in North America plummeted 6.2 percent from November to December, making this the largest monthly drop in 2013 and the third straight monthly decline. December shipment levels were 3.2 percent lower than in December 2012 and 1.8 percent lower than 2011.
That said, Cass noted that “other indicators, such as the American Trucking Association’s Truck Tonnage Index, have shown that loads have been getting heavier. This matches well with anecdotal evidence from LTL carriers that they are carrying fuller loads. And since the Cass Freight Index does not capture a representative picture of the small parcel sector of the industry, the steep downward freight movement in December was somewhat offset by the increase in small package shipping for the holidays.”
On a somewhat sobering noted, the National Retail Federation reported that Thanksgiving/Black Friday sales fell 2.7 percent, the first drop in seven years. Holiday retail sales were much weaker than in 2012, which was much weaker than 2011.
Meanwhile, inventories have continued to grow. A bright point for small package carriers, however, is that online sales were at record highs. With 36.8 million items ordered from Amazon.com on Cyber Monday, the company had to limit signups for its Amazon Prime service so that it could honor its shipping guarantees to existing members. This staggering order volume came at the rate of 426 items per second.
“Manufacturing gained strength for most of the year but at a very modest rate. Although better than 2012, which included several months of contraction, 2013 was still well below pre‐recession production levels. The Institute for Supply Chain Management’s average PMI in 2013 was 53.9 ‐ not much higher than January’s starting point of 53.1.”
Transportation employment, especially in trucking, has been rising in recent months.
Concluded Cass: “The market for U.S. goods should strengthen by the second half. The Federal Reserve will begin tapering its quantitative easing strategy in January, which will effectively push interest rates up. This could put a strain on trucking companies’ purchases of new trucks. But if the economy grows as expected in 2014, it is imperative that new trucks be added to the fleet in quantities greater than those needed to simply replace those being retired.”
Cass Freight further notes that it predicts that “freight growth will still be measurably stronger in 2014 (albeit slow and uneven). Volumes will be up consistently for several months, putting pressure on capacity before we see a rise in rates.”
Analysis provided by Rosalyn Wilson, a nationally and internationally recognized supply chain expert, and senior business analyst with Delcan Corporation based in Vienna, Virginia.
Category: Featured, General Update
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