Freight Shipment Volumes Post Small August Decline

North American shipment volume and expenditures dropped for the second month in a row.

According to Cass Information Systems, the drop in freight spending was sharper than expected, however, as truck spot prices fell lower due to abundant capacity. The decline in shipments did not follow the typical upward movement in August, but given the weak level of new manufacturing orders placed in June and July it is not unanticipated. GDP growth was strong overall during the first half of the year, with a 3.7 percent growth rate in the second quarter and a 0.6 percent growth rate in the first.

The number of freight shipments fell 1.2 percent in August on the heels of a 1.2 percent decline in July.

Cass noted: “The August decline is a diversion from the normal pattern we see at this time of year. Generally, retailers are stocking up for fall sales, but high inventories and a rising inventory to sales ratio slowed ordering earlier this year. Inventory levels—for retail, wholesale and manufacturing—are well above the high point prior to the inventory drawdown at the beginning of the Great Recession.”

Railroad traffic rose modestly, with carload traffic up 2.7 percent and intermodal up 3.5 percent. The latest data available from the American Trucking Associations for truck tonnage showed a drop of 0.8 percent in July. The Institute for Supply Management’s August PMI index showed a decline of 3.1 percent, while the Production sub-index fell 4.3 percent.

New orders were down 2.9 percent, but on the positive side, the backlog of orders rose 9.4 percent.

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