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According to The Cass Freight Index, realeased by Cass Information Systems Inc., the freight market continued to grow in April at the slow, but steady, pace experienced for most of the recovery. North American freight volumes rose 1.9 percent from March to April. Spending on freight transportation grew at a faster rate and was up 3.4 percent. With the slow growth in the economy overall, these results are not surprising to the folks at CFI.
|April 2010||Year-Over-Year Change||Month-to-Month Change|
All data courtesy of Cass Information Systems Inc.
Shipment volume has been rising steadily since January of this year, though not quickly. April’s 1.9 percent increase is lower than the increases in March and February – 2.1 and 2.5 percent respectively. While still positive, the rate of growth declined in both March and April. April’s sequential growth is a scant 0.2 percent higher than April a year ago.
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 (a ton‐mile represents a ton of freight moved one mile and is a comparable measure across modes), 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 United States.
Ton‐mile volume for railroads was down 4.8 percent in April compared to 2011, and has lagged in year‐over-year comparisons since the end of February (coal is a major factor in the declines). Intermodal volume, on the other hand, is up 5.9 percent year over year. Container shipments through the nation’s ports remain slow, but growing. Ocean carriers have started putting sidelined containerships back in service on the strength of forecasts for a strong summer shipping season. Inventories at the wholesale and manufacturing levels are high, but lower in retail as the trend has been to push inventory back up the chain. Retail inventories are well aligned with sales, with an inventory to sales ratio at 1.27 percent. Manufacturing inventories also rose steeply in the last two months as manufacturing growth slowed slightly.
The economy is showing signs of sustainable, but low, growth in 2012. There have been many positive signs in recent weeks, but each has a cautionary note. The unemployment rate fell to 8.1 percent, but the number of new jobs created during the period was well below last month’s figures. Some of the drop in unemployment is due to discouraged workers dropping out of the workforce; it is expected that they will return when the economy provides better prospects for employment.
The Institute for Supply Management’s manufacturing index rose 1.8 percent in April. Digging into the details of the report shows growth of 2.7 percent in production, a return to positive growth of 3.7 percent in new orders, but a continued contraction of 3 percent in order backlog. Exports have been strong all year, but import growth is flat. Consumer confidence improved again in April, concurrent with a rise in consumer spending.
A positive note about consumer spending is the increase in purchases of non‐necessity goods. There has, however, been a jump in consumer debt as more consumers are willing to use credit if they feel more confident about the economy.