According to data from Cass Information Systems, shipping and freight costs increased again in October year-on-year (y/y). However, Monday’s report warned that a modest increase in volumes was due to a variety of circumstances that were unlikely to repeat themselves and that year-on-year shipments were likely to turn negative into next month.
The shipments component of the Cass Freight Index was up 2.9% yoy month-on-month but down 1.4% from September. The move marked the second straight decline since the index hit a more than four-year high in August.
“Following a weak H1 2022, in which inflation, the shift from goods back to services and now excess inventories weighed on freight demand, the improvement over the past few months is still a bit of a mystery,” said Tim Denoyer of ACT Research. He believes a combination of “unique comparisons”, bringing goods ahead of the holiday and easing supply restrictions were some of the catalysts for the improvement.
“These are all temporary to varying degrees, and rapidly declining import trends suggest they may end soon,” he continued.
Assuming normal seasonality continues for the remainder of the year, Denoyer expects volumes to be flat in November and down 5% in December compared to 2021.
The expectation is consistent with recent comments from trucking management teams indicating that volumes have not increased as usual during the peak season.
|October 2022||and and||2 years||m/m||m/m (SA)|
|TL Linehaul Index||2.0%||14.4%||-1.5%||NM|
Freight spend increased 11.1% yoy in October but down 4.9% compared to September. The dataset measures total freight spend, including fuel. Weekly diesel fuel prices were up 44% year-on-year on a monthly average. This was the smallest year-on-year increase since November 2020.
Compared to two years ago, the spending index was 52.4% higher.
With shipments down only 1.4% sequentially, the Cass data concluded that rates were actually down 3.6% from September.
Cass also expects this index to flip negatively y/y in December.
“The balance between supply and demand in the US truck markets has loosened significantly this year and as a result, freight rates are stabilizing and are expected to fall further in the coming months,” continued Denoyer. “While shippers are yet to see any real savings, significant cost relief is now very likely for 2023, which we think will be welcome news for the broader inflation picture.”
The Cass Truckload Linehaul Index, which excludes fuel and utility costs, was up just 2% mom and down 1.5% sequentially. This was the index’s slowest year-on-year increase since December 2020.
“With spot rates already down significantly, it’s only a matter of time before the index starts falling on a y/y basis (December is a possibility),” Denoyer said. “It doesn’t feel like a good environment because more supply is chasing a similar amount of cargo. And it is this imbalance that is gradually driving down freight costs.”
The data used in the Cass indices comes from freight bills paid by Cass (NASDAQ:CASS), a provider of payment management solutions. Cass processes $37 billion in freight payables annually on behalf of clients.
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