North American freight volumes continues to follow the path of general malaise that the economy is experiencing, according to the Cass Freight Index, which measures overall North American freight volumes and expenditures.

The economy has been flat for several months, and a slowdown on manufactured goods is putting downward pressure on freight, according to the analysts at Cass. Cass says it's the nation's largest payer of freight bills, managing more than $20 billion annually in freight spend, which gives it the kind of logistics data that serves as an indicator of transportation industry trends.

Cass reports that the number of freight shipments in June was up a scant 1.3% from the previous month, while at the same time total freight costs declined 0.1%

Calendar year‐to-date figures show growth for the first half of the year: 9.9% on shipment volume and 7.7% on total freight expenditures. But compared to the same period a year ago, 2012 growth is significantly slower, as shipment volumes in 2011 were up 15.5% from 2010.

June Shipment Volumes

The trend in freight shipments continued upward for the year, although volume compared to June of last year was down 1.3%. For the second quarter, the number of freight movements is only 0.3% higher than in the second quarter of 2011, and down from a first quarter increase of 1.8%.

Truck shipments are mostly flat, despite strong growth in movements of seasonal produce and oil shale fracking products. The tight supply appears to be due more to a contraction in fleet and driver size than to an increase in demand, notes Cass. Tonnage for 2012 has been uneven and reflects little growth for the first half of the year.

June Freight Expenditures

Freight expenditures were an almost imperceptible 0.1% lower in June, the first decline since February of this year. The second quarter increase of 3.8% over second quarter 2011 compares to a first quarter rise of 11.5% in 2012 over the same period in 2011. Rate hikes pushed total freight costs up more than 30% in the first half of 2011, and despite the lack of volume growth, the rate hikes have held. The average revenue per shipment for trucks has been falling since April, despite announced rate hikes by many carriers. This "tenuous capacity equilibrium," as Cass calls it, has not yet started to exert upward pressure on rates. Most rate increases to date have been to cover rising expenses, not increase profits.

Other Economic Indicators

In the past month, a number economic indicators have taken a downward turn. Inventories continue to increase, particularly wholesale and manufacturing, and retail as well. The latest figures available from the Department of Commerce showed April retail sales down 5.1% and inventories up 0.8%.

Year‐to‐date figures through the end of April show retail sales up 3.3%, but inventories up 5.6%. Meanwhile, after almost three years of positive growth through the recovery, the Institute for Supply Management's manufacturing index fell below 50 for the first time since July 2009. (An index value below 50 indicates that manufacturing is contracting).

Consumer confidence fell to the lowest level this year, dropping from 79.3 in May to 73.2 in June. This was lower than predicted. In addition, consumer spending was unchanged in May (the latest period for which data is available).

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