TheTrucker.com

Cass says shipment volume up as result of expanding economy

Reading Time: 2 minutes

ST. LOUIS — Despite all the recent turmoil in the financial markets and the resulting concerns about the strength of the economy, the Cass Freight Shipments Index is signaling that the U.S. economy, at least for now, continues to be extraordinarily strong, Cass said Thursday.

Simply stated, Cass said, when shipment volume is up 8.2 percent it is the result of an expanding economy.

“We are hard pressed to imagine a scenario, barring a catastrophic geopolitical event, in which such a strong rate of freight flow expansion was possible or even a precursor to an economic contraction,” the Cass report said. “Our confidence in this outlook is emboldened by the knowledge that, since the end of World War II — the period for which we have reliable data — there has never been an economic contraction without there first being a contraction in freight flows. Conversely, during the same period, there has never been an economic expansion without there first being an expansion in freight flows.”

Cass said the index is signaling continued strong pricing power for those in the marketplace who move freight.

Demand is exceeding capacity in most modes of transportation by a significant margin.

In turn, Cass said pricing power has erupted in those modes to levels that continue to spark overall inflationary concerns in the broader economy.

“With the Expenditures Index up 19.3 percent, we understand those concerns, but are comforted by two factors: the cost of fuel — and resulting fuel surcharge —  is included in the Expenditures Index and the cost of diesel was up 17.3 percent in September; almost all modes of transportation are using the current environment of pricing power to create capacity.”

“As we explained in previous months, we do not fear long-term inflationary pressure as technology provides multiple ways to ever-increase asset utilization and price discovery in all parts of the economy, especially in transportation,” Cass said. “In fact, we are continuing to see more signs that electronic logging devices, which initially hurt the capacity/utilization of truckers and especially small truckers, are becoming an ever-smaller impediment to capacity utilization. Many of the truckers which were the most adversely effected are now getting most, if not all of, the original loss in utilization back. This is especially true in the dry van and reefer marketplaces of trucking. Even the flatbed segment of trucking, which initially faced the greatest challenges with productivity after the adoption of ELDs, has begun to adapt.”

With the first nine months of 2018 over, it is clear that 2018 will be an extraordinarily strong year for transportation and the economy, Cass said, noting that March through September exceeded all levels attained in all months in 2014, a very strong year, while February was roughly equal to the peak month in 2014 (June 2014 – 1.201 vs February 2018 – 1.198) which is exceptional.

Cass said the data in the report signaled that the coming holiday shopping season will be very strong.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Trucker News Staff

The Trucker News Staff produces engaging content for not only TheTrucker.com, but also The Trucker Newspaper, which has been serving the trucking industry for more than 30 years. With a focus on drivers, the Trucker News Staff aims to provide relevant, objective content pertaining to the trucking segment of the transportation industry. The Trucker News Staff is based in Little Rock, Arkansas.

Avatar for The Trucker News Staff
The Trucker News Staff produces engaging content for not only TheTrucker.com, but also The Trucker Newspaper, which has been serving the trucking industry for more than 30 years. With a focus on drivers, the Trucker News Staff aims to provide relevant, objective content pertaining to the trucking segment of the transportation industry. The Trucker News Staff is based in Little Rock, Arkansas.
For over 30 years, the objective of The Trucker editorial team has been to produce content focused on truck drivers that is relevant, objective and engaging. After reading this article, feel free to leave a comment about this article or the topics covered in this article for the author or the other readers to enjoy. Let them know what you think! We always enjoy hearing from our readers.

COMMENT ON THIS ARTICLE