Overall shipment volumes and pricing are persistently weak, with increased levels of volatility as all levels of the supply chain continue to try to work down inventory levels, according to the Cass Freight Index report for July.

This measure of activity in all domestic freight modes shows there have been a few areas of growth, mostly related to e-commerce, with lower levels of expansion in modes serving the auto and housing/construction industries.

All of this added up to slightly lower shipment volume in July, down 2.6% from a year ago and the 17th straight month of year-over-year declines. There was virtually no change in July from the month before, but the reading of 1.111 is the highest since September 2015.

What specifically drove July’s decline in volume? According to Donald Broughton, senior transportation analyst at the investment firm Avondale Partners, who provides analysis of the figures, July year-over-year overall traffic for major U.S. railroads declined 6.1%, as intermodal units fell 5.4% and commodity carloads originated declined 6.9%.

As for trucking, he said tonnage itself appears to be growing, with the three-month moving average increasing 2.75% (not seasonally adjusted). However, he notes truck loads have contracted on a year-over year basis three out of six months in 2016.

“No matter how it is measured, the data coming out of the trucking industry has been both volatile and uninspiring,” Broughton said. He also noted the trucking industry provides one of the more reliable reads on the pulse of the domestic economy – and how it's changing.

“It gives us clues about the health of both the manufacturing and retail sectors,” he said. “We should note that as the first industrial-led recovery (2009-2014) since 1961 came to an end, and the shift from ‘brick and mortar’ retailing to e-commerce/omni-channel continues, we are becoming more focused on the number of loads moved by truck and less focused on the number of tons moved by truck.”

When it comes to freight expenditures, the Cass Freight Index shows a July drop of 0.6% from the month before. It’s also down 5.5% from a year earlier, with the measure registering 2.355, its 17th straight month of year-over-year declines. Expenditures are being pushed lower by a number of factors, according to Broughton.

“In part, this weakness is driven by the excess of capacity in most modes: trucking, rail, air freight, barge, ocean container and bulk. The weakness is also driven in part by the ongoing decline in diesel and jet fuel and corresponding fuel surcharges that influence pricing realized by shippers,” he said. “Although at first blush it appears that in most modes the gap between spot pricing and contract pricing appears to be closing slightly, this is more a function of slight declines in contract pricing than it is a function of improvements in spot pricing.”

Broughton sees little reason to predict a change in course or material strength in either the contract or spot rates for most modes. Exceptions to this do remain in the parcel marketplace and forms of expedited transit supporting e-commerce.

You can read the full report on the Cass Information Systems’ website.