Fleet Management

Cass Freight Index Performing Well Despite December Decline

January 15, 2015

SHARING TOOLS        | Print Subscribe

A new report shows freight shipments and expenditures in shipping fell in the final month of 2014 but posted gains for the entire year.

The December Cass Freight Index followed expected seasonal trends with a 6.3% drop in shipment volume from the month before and a 6.7% decline in freight spending. Despite the drops the December figures mark the highest end‐of‐year values for both indexes since the beginning of the recession in 2007.

The Cass Freight Index measures trends in North American shipping activity based on $23 billion in paid freight expenses for hundreds of large shippers.

While the number of North American freight shipments fell in December it was still 4% higher than the same period a year ago.

Despite the difficulties getting goods out of the ports of Los Angeles and Long Beach due to labor and capacity issues, both railroads and trucking companies posted shipment volumes that were significantly higher than for the same period in 2013, according to Rosalyn Wilson, supply chain expert, and senior business analyst with the management services firm Parsons, who provides analysis for the report.

The December freight expenditures decline reflected the drop in shipment volume and along with weaker spot freight prices while falling diesel fuel prices continue to lower freight costs, the she said. Additionally, the decline in volume relieved much of the pressure on capacity, which pushed down both the demand for trucks on the spot market and spot prices.

December expenditures were 3.6% higher than the corresponding month in 2013, according Wilson, while contract rates have been rising as carriers gain more pricing control, allowing them to pass on their increased costs, especially those for drivers.

“2014 proved to be the best year for the logistics industry in the now seven‐year recovery, with sustained growth in both freight volumes and revenues,” she said. “In fact, the industry’s performance in 2014 was markedly better that that of the previous two years. Freight rates have only recently begun to spike upward, especially spot market rates.”

Wilson said despite the gains in 2014, freight volume overall has not yet returned to prerecession values, however, costs to move the freight are substantially higher than 2006.

“The driver shortage is reaching the acute stage predicted since the recovery started. Even though the global economy is not growing as expected, the U.S. economy is expected to be even stronger in 2015, which will put more strain on carriers as volumes increase,” she said. “The trucking industry is ordering new equipment at record levels, but is finding it hard to train, seat and retain qualified drivers. Labor expenses other than driver pay and benefits are growing exponentially and will be passed through to customers in the form of rate increases.”

Given the banner year for the freight industry in 2014 and the strengthening of the underlying economy, Wilson predicted an even better year in 2015.

“Freight volumes and carrier revenues will grow steadily, which is good news for carriers operating on razor thin margins, less good for shippers and consumers as the higher rates will be passed through as increased goods costs,” she said.

Comment On This Story

Name:  
Email:  
Comment: (Maximum 2000 characters)  
Leave this field empty:
* Please note that every comment is moderated.

Newsletter

We offer e-newsletters that deliver targeted news and information for the entire fleet industry.

GotQuestions?
sponsored by
sponsor logo

ELDs and Telematics

Scott Sutarik from Geotab will answer your questions and challenges

View All
GotQuestions?

Sleeper Cab Power

Steve Carlson from Xantrex will answer your questions and challenges

View All