Freight Shipments and Expenditures Extend Positive Run

Freight shipments and expenditures indices have extended their run of positive YoY comparisons, according to Cass Information Systems. Volume has continued to grow at such a pace that capacity in most modes has become extraordinary tight.

Pricing power has erupted in those modes to levels that spark overall inflationary concerns in the broader economy. Shipments (on a year-over-year basis) first turned positive sixteen months ago, while Expenditures turned positive thirteen months ago. Throughout the U.S. economy, we are continuing to see a growing number of data points suggesting that the economy continues to get increasingly better. The 12.5% YoY increase in the January Cass Shipments Index is yet another data point which confirms that the U.S. economy is strong and getting stronger.

January volume was well above other recent years, even extraordinarily strong freight years such as 2014. A YoY stacked chart highlights that, similar to November, the December 2017 shipments index exceeded all previous respective months, even surpassing the record high October established in 2014. We should point out that 2014 was during an extremely strong freight market overall and was before the industrial recession (which started in December of 2014) had begun.

As has been true since May, when viewed in an unstacked basis, it becomes readily apparent that the nominal value for each month was higher than all the monthly values posted in 2016. As January 2018 was even above the January in the record freight year of 2014, we continue to predict 2018 is poised to attain new record highs.

The January YoY percentage change is notable because the freight recovery started in the second half of 2016 (i.e., tougher comparison) and because only when comparisons were weak (i.e., 2009-2010) were the percentage increases so high.

Data continues to suggest that the consumer is finally starting to spend a little, albeit not with brick and mortar retailers. It also suggests that, with the surge in the price of crude in October of last year, the industrial economy’s rate of deceleration first eased and then began a modest improvement led by the fracking of DUCs (drilled uncompleted wells), especially in the fields with a lower marginal production cost (i.e., Permian and Eagle Ford).

The Cass Freight Index represents monthly levels of shipment activity, in terms of volume of shipments and expenditures for freight shipments. Cass Information Systems processes more than $25 billion in annual freight payables on behalf of its clients. The Cass Freight Index is based upon the domestic freight shipments of hundreds of Cass clients representing a broad spectrum of industries. The index uses January 1990 as its base month.

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