Cass index shows freight volumes slowing as costs hit records

In April 2022, Cass Information Systems reported that U.S. freight volumes slowed further in March even as the cost of moving freight kept climbing. The March report was released April 13.

The shipments component of the Cass Freight Index rose 0.6% from March 2021, down from 3.6% growth in February. Shipments rose 2.7% from February, but that was 1% below the normal seasonal pattern.

Slowing volumes

First-quarter shipments grew 0.4% from a year earlier, after 4.3% growth in the fourth quarter of 2021 and 9.5% in the third quarter.

Tim Denoyer of ACT Research, who wrote the report, said some of the softness came from Omicron-related absences, but freight had been slowing even before the war in Ukraine began. He said the threat of a freight recession had risen as services reopened, inflation pushed interest rates up and higher energy prices weighed on the economy. Still, he called it too early to declare a freight recession.

Spending at a record

The expenditures component, which measures total freight spending, reached a record, up 33.2% from a year earlier. Cass inferred freight rates, calculated as expenditures divided by shipments, were up 32% year over year.

The Cass Truckload Linehaul Index, which excludes fuel and accessorial charges, rose 14.2% from a year earlier to 163.4. Adjusted for longer average lengths of haul, Cass estimated truckload rates were up closer to 17%.

Signs of a turn

The report said leading indicators from the truckload spot market had fallen sharply in recent weeks. In early April, spot rates fell below year-earlier levels for the first time in the cycle.

Denoyer also pointed to improving driver availability. ACT's for-hire driver availability index had returned to levels seen when rates turned down in late 2018 and 2019. He said the combination of inflation, Federal Reserve tightening, the war in Europe and consumers shifting spending back to services was moving the freight cycle into its late stage, and that the market appeared to be at the peak of the rate cycle.

What it meant for carriers

The report described a split market. Contract rates were still rising, and Cass expected they could keep climbing for a few more months because contract pricing lags the spot market.

Carriers relying on spot freight were already seeing weaker rates, while their costs, including fuel, stayed high. Cass said new capacity that had entered by paying high prices for used trucks would carry a high cost base and could struggle to compete at lower spot rates.