Freight Shipment Up, But Volumes Below 2015 Levels

Freight shipments slowed to only a 1.4 percent rise in March, following an 8.3 percent jump in February, according to the Cass Freight Index.

Expenditures for freight declined 1.0 percent in March—reversing a portion of the 6.3 percent increase in February. Manufacturing and building construction have been on an upward trend and have just started showing up in the supply chain.

The March freight shipments index rose 1.4 percent, but still remains 1.5 percent below the same month a year ago. March shipments have grown at a slower pace than each February for the last couple of years, so this is not unexpected.
The March 2016 index is still 6.2 percent lower than the December 2015 index, indicating that the plummet in January is going to take quite some time to dig out of. On an average basis, the first quarter of 2016 was 3.0 percent lower than the same period in 2015.

The Institute for Supply Management’s (ISM) PMI index continued to move up in March, posting a 4.6 percent rise. Notably, the index has just passed back over the 50 index level, indicating growth, for the first time since August 2015. This is the third consecutive month of growth and is a sign that manufacturing may finally be recovering from its slump.

High inventories are still a big concern and will moderate future growth.

Both the New Orders and the Order Backlog sub-indexes increased, 13.2 and 5.2 percent respectively.  This should translate to higher production in April. One cautionary indicator though: the manufacturing sector cut 29,000 jobs in March.

Railroad shipments picked up remarkably in March with a 22.2 percent rise in carloads and a 19.2 percent rise in intermodal shipments. These follow double digit drops in February. March figures for truck tonnage are not yet available. Expect sluggish but sustained growth in freight.

Category: General Update