North American freight shipment volume and payments were up for the third month in a row during April, according to the latest readings from the Cass Freight Index.
The number of North American freight shipments jumped 4.2% in April but the level is still 2.5% lower than the same month a year ago. This put the shipments index at 1.132, its best reading since November.
Railroad shipments picked up substantially in April, with carload traffic up 25.6% and intermodal up 27.6%. Truck shipments reversed the decline reported in February and were up 1.1 percent in March, the latest month data is available.
Freight expenditures increased 1.6% in April but are 4.7% lower than they were in the same month last year. Despite the increase, the expenditures index fell from March to 2.499, but is the second highest reading of the year.
The trend for the first six months of 2014 was a large digression from the average for the last five years. After being suppressed for several years, spending and the number of shipments grew 15.6% and 15.8%, respectively, in the first half of 2014, according to Rosalyn Wilson, supply chain expert, and senior business analyst with the management services firm Parsons, who provides analysis for the report.
“The first four months of 2015 have not followed a similar trend. Freight spending is growing at a slower rate than the growth in shipment volume, indicating that there has not been much movement in rates,” she said. “In fact, spot rates in April were actually running close to or below contract rates. The drop in fuel prices has eroded fuel surcharges, which has contributed to lower rates. Capacity is still not much of a factor, so other than rising labor costs, there is not much pressure on rates.”
Despite this lack of pressure and the economy getting off to a slow start in the first quarter of the year, Wilson said growth is expected to continue and pickup throughout the rest of 2015.
“Manufacturing should perk up in the coming months as demand increases. With the strong dollar, raw material prices are lower for imported materials. Although capacity is not a problem, many companies have already announced increased levels of capital investment to update and improve plant and equipment,” she said. “The global economic picture is not as strong as the U.S. picture, so exports will continue to be weak.
The Cass Freight Index measures trends in North American shipping activity based on $26 billion in paid freight expenses in all freight modes for Cass Information Systems' customer base of hundreds of large shippers.