Cass Freight Index up in September, but Don't Expect Strong Q4
Freight costs continued to rise in September, showing the largest month-to-month increase since March, but it's not due to a raise in rates. Meanwhile, North American shipment volumes also rose for the second month in a row, according to the Cass Freight Index.

Freight costs continued to rise in September, showing the largest month-to-month increase since March, but it's not due to a raise in rates. Meanwhile, North American shipment volumes also rose for the second month in a row, according to the Cass Freight Index.
The Cass Freight Index measures trends in North American shipping activity based on $22 billion in paid freight expenses in 2012 for Cass' customer base of hundreds of large shippers.

"For the first time since the recession, we experienced a peak shipping season bump in volume," notes the report, however, it says this increase "was driven mostly by a return to growth in the manufacturing sector rather than to stocking up for back‐to‐school or the holiday season."
On a month‐to‐month basis, freight shipment volume increased 1.7% in August and 2.7% in September, according to the report. Volumes having fallen below 2012 levels every month this year since April, but September volumes came in just over last year's at 0.1%. However, 2013 shipments are still 3.7% below September 2011 volumes.
The Association of American Railroads reports that the last three weeks of September were the highest weeks on record for intermodal movements. Manufacturing production began to rebound in August after dropping off earlier in the year.
"Although the volume growth coincides with the traditional peak season, resulting in the peak season bump, it is not indicative of a strengthening of the economy as we begin the fourth quarter," notes the report.
The government shutdown will only slow the economy, Cass notes; estimates are that each week of shutdown will shave 0.1% off the GDP.
When it comes to expenditures, the Cass report said the higher numbers were caused by load‐to‐truck ratios (more volume per truck), as well as greater volumes shipped, rather than rate increases.
"Despite the precarious supply and demand situation in the trucking sector, which is between 95% and 98% engaged, shortages have not been widespread. Shippers are acknowledging that a capacity crisis is looming and have kept up the pressure to hold rates level. They are, however, taking steps to ensure that they have the capacity they need when things tip over the edge."
The hard part, says the report, is trying to figure out when that tipping point will happen. The economy keeps growing just slowly enough to keep pushing it out to the horizon.
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