Freight Shipments Down in October, Partially Due to Government Shutdown

According to the Cass Freight Index Report, October was a depressed month for freight and the economy in general. The number of shipments and freight expenditures both declined from September, by 3.5 and 2.6 percent respectively. 

This marks onlythe second time this year that both indexes declined in the same month. (Shipment volume in April dropped 3.5 percent, but expenditures fell only 1.6 percent.) The 16-day federal government shutdown is partly to blame for the declines, but prior to the shutdown the economy was already exhibiting signs of a cool down.

October Shipment Volumes

The 3.5 percent decline in freight volumes followed two months of strong growth, but is reflective of the weakening state of the overall economy. Shipment volume has already been below corresponding 2012 volumes in six months of this year, and October contributed the seventh month, coming in 2.0 percent below a year ago.

The sharp reduction in the shipment volume in October can be linked to the government shutdown. Although Customs and Homeland Security workers were exempt from the furlough, many freight shipments were delayed because other government agencies were not open to perform necessary inspections or processing. Railroad carloadings declined again in October, dropping 0.7 percent, while intermodal loadings reversed September’s drop and rose 2.5 percent.

Truck tonnage rose in September (the month for which the latest data is available from the American Trucking Association), but spot market load indicators have declined sharply in October. U.S. manufacturing output was almost flat in September, with even the automotive sector showing definite signs of slowing. With inventories growing and retail sales and business spending flagging, there has been little reason to restock. In addition, export demand began to stall in August and has just begun to rebound.

October Freight Expenditures

Freight expenditures for October fell 2.6 percent – the largest decrease in 2013. Monthly expenditures have declined only two other times this year; in October they were 6.1 percent higher than at year-end 2012. The decrease in expenditures mirrors the drop in shipments and primarily reflects a change in volume, not a substantial change in rates. Carriers have found rate increases difficult to sustain throughout the year, and October was no exception. Spot market rates softened as the month progressed, and posted loads dropped off.

 

Category: General Update