The newly released November Cass Freight Index shows a drop in total freight expenditures of 0.7% and a corresponding decline in shipment volumes of 0.2%, however the level was higher than expected, pointing to strong finish for 2014.

The index measures trends in North American shipping activity based on $23 billion in paid freight expenses for Cass' customer base of hundreds of large shippers.

“This was not unexpected given the fact that retailers stocked up early in anticipation of problems at the West Coast ports,” said Rosalyn Wilson, supply chain expert, and senior business analyst with the management services firm Parsons, who provides analysis for the report..“While November is generally a slower month for freight movement, the last several years have shown dramatic drop-offs in November. So, in context, this slight downward shift is an encouraging improvement that is helping to cap off a good year for freight.”

According to her, the drop in the number of freight shipments is the third since August, but is not cause for alarm.

“In fact, the November shipment level remained 4.2% higher than the same month a year ago and represents the highest point on our shipments index since the Great Recession,” she said. “Inventories remain high, as many retailers placed orders early to avoid expected transportation problems with ports and truck capacity."

However, she noted that not all shippers were able to avoid deliveries to West Coast ports in November and they are experiencing three week or longer delays in receiving their goods.The reason is labor issues, chassis shortages and inefficient chassis distribution, port throughput limitations due to heavily loaded, larger ships, and rail capacity problems have combined to create costly freight bottlenecks at the ports of L.A., Long Beach and Oakland.

“In addition, early price discounting made a dent in traditional Black Friday sales figures and traffic,” said Wilson. “Lower gas prices were expected to fuel more spending, but consumers are still behaving conservatively and holding out for even further discounting”

She said the good news is “Cyber Monday” sales soared again this year, rising between 8.5% and 16% percent depending on the measure you follow. Also, the National Retail Federation still predicts overall holiday sales will rise 4.1% this year over 2013 and small package and parcel shippers, such as UPS and FedEx, have dramatically expanded their capacities to avoid the spate of late deliveries experienced last year.

Meantime, the 0.7% decline in the November freight payment index mirrors the drop in shipment volumes.

“Diesel fuel prices continue to impact rates, mitigating much of the increases announced recently,” said Wilson. “November 2014 payments are 5% higher than the corresponding month a year ago and remain close to the record high established in June of this year. Capacity was not as tight throughout much of the supply chain, with the exception of port-related traffic, so spot prices were down.”

As far as the overall picture, Wilson said the first eleven months of 2014 have shown this to be the best year for freight that we have experienced since the recession.

“Freight volumes are up and costs to move that freight are also trending up,” she said. “This is good news for the nation’s carriers in spite of the headwinds being battled, such as port congestion, throughput capacity, and port labor problems.”

On the downside, she also noted the long-term weather forecast for this winter does not look much better than last year, so the transportation system could be faced with the same problems the railroads faced in the Northwest last year. Also, Wilson said truck equipment and driver capacity have been barely adequate at times this year and will be inadequate for the continued growth expected in 2015.

“It remains to be seen how this year’s holiday season will shake out, but there is no doubt that consumers are spending again, both on goods and services,” Wilson said. “Unlike the last six years, the fourth quarter of 2014 is not going to show a precipitous slide downward, only the normal seasonal slowdown we experienced in the years prior to the recession. 2014 will prove to be the banner year that was predicted and 2015 should be looking at a strong start."