Spending on freight transportation grew at a faster rate and was up 3.4%.
Shipment volume has been rising steadily since January of this year, although not at a very robust pace. April's 1.9% increase is lower than the increases in March and February, 2.1% and 2.5% respectively. Although still positive, the rate of growth declined in both March and April. April's sequential growth is a scant 0.2% higher than April a year ago.
Cass analysts point out that Truck tonnage has been trending upward in the American Trucking Associations' Truck Tonnage Index, but length of haul has been declining; therefore on a ton‐mile basis, truck freight has actually been flat or even contracting slightly. The boom in shale oil and gas drilling, or fracking, caused a significant portion of the rise in truck tonnage. Thousands of trucks of sand, pipe and water are being moved by truck to the wells throughout the shale plays in the U.S.
April Freight Expenditures
Overall freight spending in April was 5.1% higher than a year ago, Cass reports. The 3.4% month-to-month increase shows continued strength in rates as capacity closely matches demand, especially in the trucking sector. Much of the strength in rates comes from contract rates that were negotiated early last year anticipating a faster economic growth rate and capacity issues, which were expected to cause a spike in rates.
Comparing the increase in freight costs to the growth in freight shipments shows that payments are again rising faster than volume, Cass notes. Since operating costs for truck carriers have been steady, this translates to a better bottom line.
"This tenuous balance in the trucking sector between demand and supply will be easily undone if freight volumes pick up," the report notes. "The 20% loss of capacity and the productivity losses due to new regulations will be felt quickly. Many in the sector have turned to an asset‐light model, and capacity will not be able to be added quickly. Indeed few carriers have indicated that they intend to expand their fleets."