The Cass Freight Report for May was released Tuesday, and it showed trucking rates were down sharply on still soft volumes.
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Denoyer notes that, "net of grants and reinstatements, DOT carrier operating authorities are being revoked at a record rate of about 2,000 per month
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The monthly report from Cass and partner Tim Denoyer of ACT Research is based on data from the billions of dollars of freight bills that Cass pays for its shipper clients.
The Cass shipments index, which covers several modes but is weighed towards full truckload freight, the shipments component of the Cass Freight Index rose fell 0.8% versus April in seasonally adjusted (SA) terms and was down a sharp 5.6% year-over-year.
Denoyer noted that "Freight markets continue to work through a downcycle which featured its first year-over-year decline 17 months ago. The past three downcycles have ranged from 21 to 28 months."
He added that declining real retail sales trends and on-going inventoy destocking remain the primary headwinds to rising freight volumes, but Denoyer believes dynamics are shifting as real incomes improve and the worst of the destocking is over.
The expenditures component of the Cass Freight Index, which measures the total amount spent on freight, fell 6.8% month-over-month in May and a hefy 15.7% year-over-year.
With non-seasonally adjusted shipments up 1.9% month-over-month in May, Cass infer rates were down 8.5% versus April.
The expenditures component of the Cass Freight Index rose 23% in 2022, after a record 38% increase in 2021, but is set to decline about 16% in 2023, assuming normal seasonal patterns from here out.
Another look at rates comes from the Cass Linehaul Index, which measures US per mile truckload rates before fuel surcharge and other accessorials.
US truckload rates fell 2.6% month-over-month in May, after a 0.8% monthly decline in April.
Compared to 2022, the Linehaul Index fell 15.3% in the month after a 12.2% year-over-year decline in January.
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As it did last month, Cass noted that the Linehaul Index includes both spot and contract freight, adding that the larger contract market is likely to continue adjusting down.
Looking at the US freight market as a whole, Denoyer says that "Supply is key to the freight rate cycle, and too much capacity is continuing to chase too little freight. Even as spot rates rose in May and so far in June, it hasn’t been much of a bounce."
However, he notes that, "net of grants and reinstatements, DOT [carrier] operating authorities are being revoked at a record rate of about 2,000 per month since October 2022. So, capacity is contracting at a record pace, which is key to the bottoming process."
Each month, Cass nicely summarizes the state of freight, as seen in the graphic below for May:
Source: Cass Information Systems
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