Freight Shipments Dip as Freight Spending Inches Up in Oct.

The transportation ecosystem is finding itself in turmoil as freight shipments, particularly imports, climb in anticipation of a stronger holiday shopping season this year.

The real story, however, according to Cass Information Systems, is that the cargo is having trouble entering the country and moving quickly to final end users.

Port congestion, especially on the West Coast, is causing trouble for retailers attempting to stock their shelves for the season kickoff on Black Friday.

All of this contributed to domestic freight shipment activity dipping again in October, while total freight spending rose slightly.

On the shipment activity side, the overall number of shipments fell another 0.9 percent from September to October. The slide can be attributed to the port congestion and to a drop in new orders for manufactured goods in September.

New orders are up a strong 9.7 percent and, even better, the backlog of orders is up 12.8 percent – indicating that we can expect strong factory shipments in the coming months.

Exports continue to drop off, down 3.7 percent, as the strength of the dollar exacerbates weakening global demand.

Imports, on the other hand, were up 2.3 percent as retailers continue to order to stock shelves.

On a year over year basis for October, the number of shipments is 3.3 percent higher than levels in October 2013.

The October freight payment index rose 0.1 percent, somewhat lower than the 0.8 percent rise last month.

Diesel fuel prices continue to plummet, reducing the impact of fuel surcharges on carriers’ linehaul rates.

October 2014 freight expenditures are 6.4 percent higher than the corresponding month a year ago and 11.8 percent higher than December 2013.

Freight rates are finally starting to move and shippers are pushing back, but in most cases they have no choice but to accept the rate hikes due to parallel capacity issues.

Most of the small parcel carriers have announced substantial rate increases in advance of the holiday season. With the scarcity of equipment and drivers, rates have only one way to move.

Source: Cass Information Systems

Category: Featured, General Update