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Freight shipments, costs sag in March

Cass Freight Index records 12% y/y decline in expenditures

Freight market outlook in question as first-quarter earnings season nears. (Photo: Jim Allen/FreightWaves)

Freight shipments fell in March alongside transportation costs, according to payment services provider Cass Information Systems.

The shipments component of the Cass Freight Index declined 1% from February, 4% lower year over year (y/y). The expenditures subindex, which measures the total costs associated with shipping freight inclusive of fuel, fell 1.5% sequentially and 12% y/y.

“Soft real retail sales trends and ongoing destocking remain the primary headwinds to freight volumes, and sharp import declines suggest this type of environment will persist for some time,” said ACT Research’s Tim Denoyer.

Assuming normal seasonality moving forward, Denoyer said shipments will be 1% to 3% lower y/y over the next few months.

March 2023



m/m (SA)
TL Linehaul Index-9.6%3.2%-0.6%NM
Table: Cass Information Systems. SA (seasonally adjusted)

Truckload rates are expected to continue to fall, according to a report published by investment firm TD Cowen (NYSE: TD) and 3PL AFS Logistics. A predictive freight index showed per-mile TL rates will be down 13.1% y/y in the second quarter and just 6.6% higher than when the index started in January 2018.

As freight data continues to bobble along the bottom, industry analysts are showing concern that a material recovery in demand may not take shape in the second half, which was the consensus expectation heading into the year. However, shippers provided a bit of optimism around inventories in a recent Morgan Stanley (NYSE: MS) survey.

Of those polled, there was a 10-percentage-point increase in the number of respondents saying they would maintain current stock levels, suggesting shippers’ sustained efforts to curtail merchandise overhangs are working. There was also a decline in those saying that their inventories need to be reduced for the first time in six quarters. Overall, nearly 75% expect inventory levels to normalize this year.

Chart: (SONAR: OTRI.USA). A proxy for truck capacity, the Outbound Tender Reject Index, shows the number of loads being rejected by carriers. The index has fallen to below 3% compared to a little more than a year ago when fleets were rejecting more than 20% of loads under contract. To learn more about FreightWaves SONAR, click here.
Chart: (SONAR: NTIL.USA). The National Truckload Index (linehaul only – NTIL) is based on an average of booked spot dry van loads from 250,000 lanes. The NTIL is a seven-day moving average of linehaul spot rates excluding fuel. Spot rates are currently 31% lower y/y.

Backing out the impact lower shipments had on the total amount spent on freight in the month, rates on an inferred basis were 8.3% lower y/y, according to Cass. Lower fuel prices were the primary reason for the decline in inferred rates but “there’s clearly also still market pressure on rates,” Denoyer said.

Cass’ TL Linehaul Index, which excludes fuel and accessorials, fell sequentially for the 10th straight month in March, down 0.6% from February and 9.6% lower y/y. The data set includes both spot and contract freight.

Denoyer noted that TL typically takes share from less-than-truckload and intermodal in loose freight markets. This modal mix shift has been captured by Cass’ index over the past year. However, that trend has reversed in recent weeks, suggesting “the trucking industry has passed peak looseness” and that “capacity growth has started to slow, and a rebalancing has begun.”

Data used in the Cass indexes is derived from freight bills paid by Cass (NASDAQ: CASS), a provider of payment management solutions. Cass processes $44 billion in freight payables annually on behalf of customers.

More FreightWaves articles by Todd Maiden

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Todd Maiden

Based in Richmond, VA, Todd is the finance editor at FreightWaves. Prior to joining FreightWaves, he covered the TLs, LTLs, railroads and brokers for RBC Capital Markets and BB&T Capital Markets. Todd began his career in banking and finance before moving over to transportation equity research where he provided stock recommendations for publicly traded transportation companies.