Freight Shipments Year-over-Year Drop

While North American freight shipments continued to rise in April, although at a much lower rate than earlier in the year, year-over-year numbers dropped.

Specifically, according to Cass Information Systems, freight shipments and expenditures, year-over-year, were down 4.9% and 8.3% respectively. The company noted: “This slowdown mirrors the slowdown in the economy. Expenditures for freight were up marginally. The number of new jobs created fell in April as the unemployment rate hit a one-year high. Hiring for manufacturing, which declined in March, stalled, while construction jobs also fell off.”

These are signs that businesses are holding off on hiring because of the perceived weakness in the economy. Manufacturing declined in April and remains weak.

The April freight shipments index increased a meager 0.7 percent from March. The first four months of 2016 were a departure from the more robust growth seen in the same period for the last five years. The April 2016 freight shipments index is 4.9 percent lower that for April 2015. April railroad shipments reversed the 22.2 percent increase in carloads from February to March, dropping 21.1 percent.

April intermodal shipments followed suit, declining 17.8 percent after a rise of 19.2 percent in March. The March truck tonnage figure dropped 4.5 percent, erasing about half of the February gain. February was an all-time high for the American Trucking Associations’ monthly Truck Tonnage Index. In April, the Institute for Supply Management’s PMI Index declined 1.9 percent, a setback after four months of slow, but steady growth. New orders declined almost 4 percent.

Interestingly, the only industry reporting a decline in new orders was textile mills. This is, according to Cass, “probably due to high inventory levels of retail goods, including clothing.” Production fell almost 2 percent, with decreases in textiles and petroleum and coal production. The backlog of orders also declined about 1 percent. May is usually a relatively strong month for freight shipments, but given the high inventories with ever slower turnover rates and the decline in new production orders, May could be another soft month.

North American freight payments rose 0.2 percent in April. With freight shipments up 0.7 percent, this indicates that rates are very soft. With ample capacity available across the modes, competition for loads is holding rates down. The April 2016 index is 8.3 percent lower than in April 2015.

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