Freight Index Shows Decline Amidst Challenges in Shipping Sector

The Cass Freight Index’s shipments component experienced a decline, dropping by 1.6% from March on a seasonally adjusted basis and registering a 4% decrease year over year (y/y). This decrease was highlighted in Tuesday’s data, indicating that shipment volumes were hovering around the cycle trough observed from late 2023 to January 2024. April’s reading marked the lowest point since January, a period typically slower in freight activity but exacerbated this year due to severe winter weather.

Factors contributing to this decline included a delayed Lunar New Year and the impact of the Baltimore bridge collapse, both of which reduced demand throughout the month. The report also noted that the expansion of private fleets has negatively affected results for for-hire fleets.

The comparisons on a y/y basis for the shipments index are expected to become more favorable in the upcoming months. The forecast suggests a 3% y/y decline for May. Initially, there was anticipation for a positive turn by June, but this projection is now uncertain.

In April 2024, the y/y comparisons for various metrics within the freight index showed significant declines:

  • Shipments: -4.0% y/y
  • Expenditures: -16.8% y/y
  • TL Linehaul Index: -3.8% y/y

The expenditures index, encompassing all freight-related expenses including fuel surcharges, decreased by 16.8% y/y in April. Adjusted for the decline in shipments, rates showed a 13% y/y decrease, the smallest decline since last May.

Looking ahead, the summer months are expected to see a moderation in y/y declines, with a projected 16% decrease in the first half of 2024 and a 10% decrease for the full year.

The Truckload Linehaul Index, excluding fuel and accessory charges, decreased by 3.8% y/y but showed a slight increase compared to March.

Although spot rates have remained relatively stable, putting less pressure on the larger contract market, there have been instances of contract rate increases, particularly noted by Schneider National (NYSE: SNDR) during the first-quarter earnings season.

The Truckload Linehaul index’s two-year comparison to April 2022 recorded a significant decline of over 15%, reflecting ongoing challenges in the freight market.

Despite these challenges, the report remains cautiously optimistic, noting the potential for economic growth to positively impact the freight sector in the future. However, current trends indicate that railroads and private fleets are primarily handling the freight growth generated by the economy.

The data analyzed in these indexes is sourced from freight bills processed by Cass Information Systems (NASDAQ: CASS), a provider of payment management solutions handling approximately $40 billion in freight payables annually for its customers.

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