Source: Cass Information Systems
Both the Shipments and Expenditures Indexes have been positive for two months in a row. Throughout the U.S. economy, there is a growing number of data points suggesting that the economy is getting better. Some data points are simply less bad, but an increasing number of them are better, and even a few are becoming outright strong. The 1.9% YoY increase in the February Cass Shipments Index is yet another data point which strongly suggests that the first positive indication in October may have indeed been a change in trend. In fact, it now looks as if the October Cass Shipments Index, which broke a string of 20 months in negative territory, was one of the first indications that a recovery in freight had begun in earnest.
Data is suggesting that the consumer is finally starting to spend a little. It also suggests that, with the surge in the price of crude in October of last year, the industrial economy’s rate of deceleration first eased and then began a modest improvement led by the fracking of DUCs (drilled uncompleted wells), especially in the fields with a lower marginal production cost (i.e., Permian and Eagle Ford). We have been questioning, “How fast will the recovery from here be?” However, the overall freight recession, which began in March 2015, appears to be over and, more importantly, freight seems to be gaining momentum.
Unlike in January, the February sequential pattern looked very promising (in January the YoY was up 3.2% but was down 6.4% sequentially). Since February is always one the weakest freight months for most modes of transportation (truck, rail and parcel), the sequential strength emboldens our view that the recovery is not a ‘flash in the pan’ but real. We also continue to receive almost-daily reports of stronger shipment volume in all modes from both hard data sources and industry anecdotes, which we will outline later in this report.
The Cass Freight Shipments Index—when viewed on a nominal YoY stacked basis—further highlights the strength of the current number. Although not quite yet back to the most recent peak reached in 2015 (1.083) and nowhere near the all-time February peak reached in 2005 (1.321), February 2017 was relatively equal to the February indices reached in 2013 and 2014 (1.077 and 1.073, respectively).
>> Click here to read the entire Cass Freight Index Report – February 2017 from Cass Information Systems.