Cass index shows freight market stuck in 'extended soft patch'
U.S. freight shipments fell 4% from a year earlier in March 2023 and spending on freight dropped 12%, the Cass Freight Index showed.
In April 2023, the Cass Freight Index showed U.S. freight shipments falling 4.0% year over year in March, as the market worked through what the report called an "extended soft patch."
The shipments index stood at 1.155 in March, down 1.0% from February. On a seasonally adjusted basis it was 3.8% lower month over month, after easing 0.3% in February. The year-over-year decline followed a 0.3% drop in February.
Why volumes fell
The report's author, Tim Denoyer, vice president and senior analyst at ACT Research, wrote that mild winter weather and the Omicron wave a year earlier had supported comparisons in January and February, so a weaker March was not a surprise.
"Soft 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," he wrote. Normal seasonality from the March level pointed to year-over-year declines of 1% to 3% over the next few months.
Spending and rates
The expenditures index, which measures total spending on freight, fell 1.5% from February and 12.0% from a year earlier. It had risen 23% in 2022 after a record 38% jump in 2021, and the report said it was set to retrench in 2023.
Cass inferred freight rates, calculated by dividing expenditures by shipments, were down 8.3% year over year after a 9.4% drop in February. The report estimated that lower fuel prices would take about 5% off freight rates year over year starting in mid-second quarter, as the market passed the anniversary of the fuel spikes that followed Russia's invasion of Ukraine. It said there was also still market pressure on rates beyond fuel.
The Cass Truckload Linehaul Index, which covers both spot and contract freight, fell 0.6% from February to 147.7 and was down 9.6% from a year earlier.
What it meant for carriers
The report said spot rates were already down significantly and the larger contract market was likely to keep adjusting downward, more gradually. Freight had been moving from less-than-truckload and intermodal into truckload as capacity grew. But Cass said capacity growth had started to slow, and the shift in modal mix so far in 2023 suggested trucking had passed "peak looseness," with a rebalancing under way.