|August 2022||Year-over-year change||2-year stacked change||Month-to-month change||Month-to-month change (SA)|
|Cass Freight Index - Shipments||1.278||3.6%||16.3%||6.6%||5.5%|
|Cass Freight Index - Expenditures||4.614||20.4%||71.2%||1.9%||2.1%|
|Cass Inferred Freight Rates||3.610||16.3%||NA||-4.4%||-3.2%|
|Truckload Linehaul Index||159.74||7.4%||20.9%||-1.8%||--|
The shipments component of the Cass Freight Index® rose 3.6% on a y/y basis in August, ahead of the revised 1.9% y/y increase in July and the -0.3% average year-to-date through July. The August reading is the best since the record set in May 2018.
The July index is revised to 1.199 from 1.182.
The expenditures component of the Cass Freight Index®, which measures the total amount spent on freight, rose 1.9% m/m in August after a 3.0% decline in July, with shipments up 6.6% and rates down 4.4%.
The July index is revised to 4.527 from 4.499.
We estimate roughly 7pps-8pps of the y/y increase in the expenditures index is currently due to fuel prices alone, and part of the m/m decline in rates was due to lower fuel prices. This index includes changes in fuel, modal mix, intramodal mix, and accessorial charges.
Simply following normal seasonality from here, this index is on track for a 24% increase in 2022 and would turn down on a y/y basis next February.
The freight rates embedded in the two components of the Cass Freight Index rose 16% y/y in August, decelerating quickly from the 26% y/y increase in July.
With the tight supply/demand balance in U.S. trucking markets easing considerably this year, industry rates are topping out and set to slow sharply in the months to come.
While shippers aren’t seeing any real savings yet, such relief is now highly probable for 2023, which is welcome news for the broader inflation picture.
Cass Inferred Freight Rates are a simple calculation of the Cass Freight Index data, expenditures divided by shipments, producing a data set that explains the overall movement in cost per shipment. The data set is diversified among all modes, with truckload representing more than half of the dollars, followed by LTL, rail, parcel, and so on.
The Cass Truckload Linehaul Index® rose 7.4 y/y in August to 159.7, after rising 10.5% y/y in July.
Even with a summer volume uptick, freight markets are loose heading into peak season, largely due to the significant supply response which gained momentum this year.
During the active hurricane seasons of both 2020 and 2021 (June 1- November 30), the ACT Research composite of DAT spot rates, ex-fuel, rose 8% and 4%, respectively, into Labor Day. This year, spot rates fell about 6%, ex-fuel, amid the calmest hurricane season since 2013.
But there’s much more at work in the freight economy than the weather. The hurricane effect is considerable, and the season isn’t over, but we think the divergence between this year’s early September rate trend with the past two is mainly due to the looser market balance. The shipment rebound is, so far, not enough to outweigh the 4%-5% growth rates in the driver and Class 8 tractor populations presently. The story concludes in ACT Research’s monthly Freight Forecast.
Moreover, the looser market balance we see in U.S. freight markets is consistent with the easing happening in global ocean spot markets, where rates were 56% below year-ago levels in early September (see chart). The broader effects of these cost savings for shippers will show up more in 2023, so should gradually become more helpful to the Fed’s fight against inflation and for resolving supply chain issues. One interesting takeaway from the IANA intermodal conference in Long Beach this week is that there’s still a whole lot of inefficient freight jamming warehouses and slowing rail service.
Now that the pendulum is swinging, some crucial questions about the freight rate cycle have been raised: How bad? How long? And when will it turn? The ACT Research Freight Forecast report provides monthly, quarterly, and annual predictions for the truckload (TL), less-than-truckload (LTL), and intermodal markets through 2024, including capacity, volumes, and rates. The report provides monthly updates of forecasts for the shipments component of the Cass Freight Index and the Cass Truckload Linehaul Index®, as well as DAT spot rates by trailer type, including and excluding fuel surcharges.
Release date: We strive to release our indexes on the 12th of each month. When this falls on a Friday or weekend, our goal is to publish on the next business day.
The material contained herein is intended as general industry commentary. The Cass Freight Index, Cass Truckload Linehaul Index (“Indexes”), and other content are based upon information that we consider reliable, but Cass does not guarantee the accuracy, timeliness, reliability, continued availability or completeness of any information or underlying assumptions, and Cass shall have no liability for any errors, omissions or interruptions. Any data on past performance contained in the Indexes is no guarantee as to future performance. The Indexes and other content are not intended to predict actual results, and no assurances are given with respect thereto. Cass makes no warranty, express or implied. Opinions expressed herein as to the Indexes are those of Stifel and may differ from those of Cass Information Systems Inc. All opinions and estimates are given as of the date hereof and are subject to change.