ST. LOUIS — Both the Cass Information Systems Shipments and Expenditures Indexes extended their run of positive year-over-year comparisons during October.
Shipment volume turned positive 11 months ago, while expenditures turned positive 10 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 incrementally better,” the Cass report said. “The 2.9 percent year-over-year increase in the October Cass Shipments Index is yet another data point which confirms that the first positive indication in last October (before the election) was a change in trend. In fact, it now looks as if the October 2016 Cass Shipments Index, which broke a string of 20 months in negative territory, was one of the first indications that a recovery in freight had begun.”
Cass said the October 2017 shipments index surpassed three of the last four Octobers and was in line with the recent record high October established in 2014 (the previous record was set in 2007). – note that these data points are provided here).
“We should point out that 2014 was during an extraordinarily strong freight market overall and was before the industrial recession, which started in December 2014, had begun,” the report said.
Although less positive than May and June, the October year-over-year percentage change looks less encouraging because the freight recovery started in the second half of 2016, Cass said.
The report noted that data continue 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 drilled uncompleted wells, especially in the fields with a lower marginal production cost.
Cass said the DAT Dry Van Weekly Barometer is giving real-time indications of stronger demand and tighter capacity in this freight group.
“We believe this is being driven in part by the Hurricanes Harvey and Irma, which first displaced equipment, then have been driving recovery and rebuild volumes.
The Cass Expenditures Index is a measure of the total amount spent on North American freight. Typically, an increase in freight volumes correlates to an increase in the overall amount spent moving freight.
When the expenditures index rises more than the shipments index, as it did in October, then rates are also rising.
After posting an extraordinary 7.4 percent year-over-year increase in May, the Cass Freight Expenditures Index posted a 5.4 percent increase in June and a 4.5 percent increase in July, and then proceeded to post what Cass thought was a blow-out 9.7 percent in August.
“Although not as strong as August, September’s 4.6 percent increase was still respectable and indictive of an economy that is continuing to expand,” Cass said. “Then along came October’s 11.2% increase, which was the second largest percentage increase posted in the last five years (June 2014’s 12.1 percent was higher).
As for shipment volumes, parcel volumes associated with e-commerce continue to show outstanding rates of growth, with both FedEx and UPS reporting strong U.S. domestic volumes.
Cass said the trucking industry provides one of the more reliable reads on the pulse of the economy because it gives clues about the health of both the manufacturing and retail sectors.
The report noted that tonnage is growing and gaining momentum (September was up an 9.5 percent on a seasonally adjusted basis, and the three-month moving average reached plus 5.3 percent on a not seasonally adjusted basis in September, according to the most recent American Trucking Associations data.