The Cass Freight Report for July was released Monday, and it showed trucking volumes were down sharply versus June and year-over-year, with rates down even more than the drop in freight movements.
Supply Chain Digest Says...
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Another look at rates comes from the Cass Linehaul Index, which measures US per mile truckload rates before fuel surcharge and other accessorials.
In July, the index fell 12.7% year-over-year.
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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 shipjments index, which covers several modes but is weighed towards full truckload, was down 1.2% month-over-month on a seasonally adjusted basis. It was also down 8.9% versus July 2022.
Denoyer says that freight markets remain in a downcycle, which saw its first year-over-year decline 19 months ago. The past three downcycles have ranged from 21 to 28 months in length.
In seasonally adjusted terms, the index is now 13% below the December 2021 cycle peak, slightly greater than the peak-to-trough declines in two of the three downcycles in the past dozen years.
What is going on?
“We’ve been citing the key factors behind the freight downturn - substitution and inventory - for well over a year, but it’s not all macro factors," Denoyer said.
Part of the downturn in Cass’ numbers, Denoyer says, is a migration of freight to private fleets.
Denoyer notes the publicly traded for-hire truckload fleets reduced their collective tractor count by 3% in the 1H of 2023, and operating authority revocations remain elevated, meaning for-hire truck capacity is contracting quickly.
However, production of Class 8 tractors remains high, growing the overall US truck fleet - and keeping downward pressure on spot rates.
“Private fleets represent over half of Class 8 tractor capacity, and we believe their growth is pulling freight out of the for-hire market, prolonging the industry downturn,” Denoyer says.
The expenditures component of the Cass Freight Index, which measures the total amount spent on freight, fell 2.8% versus June and 24.4% year-over-year. So shipments were down 8.9% in the month versus 2022, while freight spend fell much more (24.4%), implying a big drop in rates.
Another look at rates comes from the Cass Linehaul Index, which measures US per mile truckload rates before fuel surcharge and other accessorials.
In July, the index fell 12.7% year-over-year. That follows a 14.1% decline in June.
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Looking at the US freight market as a whole, Denoyer says that "The capacity contraction in the for-hire sector is coiling the proverbial spring for better market conditions, but this outlook could be spoiled if the private fleet segment continues its massive fleet expansion.
Each month, Cass nicely summarizes the state of freight, as seen in the graphic below for July:
Source: Cass Information Systems
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