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The economic stalemate is still prevalent in the freight economy based on data in the August edition of the Cass Freight Index Report (PDF) from Cass Information Systems.
The Cass Freight Index accurately measures trends in North American shipping activity based on $20 billion in paid freight expenses of roughly 350 of America’s largest shippers, according to Cass officials.
North American freight volumes and expenditures both declined 1.1 percent in August from July levels.
According to the report, "North American freight volumes continued to drop off, and at a faster pace than last month’s .7 percent decline. On a year‐over‐year basis, shipment volumes were down 1.1 percent from last August."
This is the third time this year freight shipments have fallen below the level for the same month in 2011. Freight volumes grew 9.9 percent during the first half of the year, but after two months of consecutive contraction, the annual growth has fallen to 8.0 percent.
Weak conditions in both the U.S. and global economies have led to the continued decline in freight shipments. Inventories are building beyond the levels needed to support expected sales and many retailers and manufacturers have pulled back on restocking. Worldwide orders are in a state of steady decline. In fact, the Chinese Manufacturing Index has fallen in each of the last ten months, with export orders in August falling at the sharpest rate since March 2009, at the height of the recession.
Additionally, freight expenditures fell for the fourth month in a row, dropping 1.1 percent in August.
"Compared to August 2011, freight spending is up 3.8 percent; however, the cumulative rise in 2012 is 4.4 percent (against volume increases of 8.0 percent). For the most part, rates were largely unchanged in August," the report states. "Truck capacity is getting very tight in some regions of the country due to both a lack of equipment and an even more severe driver shortage. Driver pay has been increasing faster than rates, indicating that the increased cost has not yet been passed through. Expect rates to hold firm at current levels or even increase as capacity continues to tighten and carriers face higher costs for labor and fuel."
Furthermore, "Building inventories, declining new orders and backlogs, and falling consumer and business confidence in short‐term economic growth are all pointing to a flat to declining freight market in the coming months. Uncertainty regarding taxes, as well as other issues that hinge on this year’s election, has bred a sense of uneasiness and unwillingness to move forward."