Overall freight shipments, values dip in April

If you’re determined to read only about clear signs of economic growth, you’d be well advised to avoid the American Trucking Associations’ freight index and the Cass Freight Index that measures North American shipments.

The Cass Freight Index for April fell 3.5% compared to March, and was 1.3% below April 2012 levels.

“North American shipment volume and overall freight expenditures both slumped in April, following strong showings in March. The drops are not unexpected given the slowing state of the economy overall,” noted Rosalyn Wilson, a supply chain expert and senior business analyst with Vienna, Va.-based Delcan Corp., who provides economic analysis for the Cass Freight Index.

Wilson said the pattern of starting strong only to fall back is becoming a recent trend, but the 2013 figures indicate a deeper decline.

“This month’s declines are significant because once again both the number of shipments and dollars spent have fallen below same month 2012 levels, and the number of shipments is even lower than the April 2011 level. This is indicative of the slow growth experienced since 2010 that has created a very narrow bounding range for each measure, with a small difference between the lows and the highs,” Wilson explained.

Cass uses data from $22 billion in annual freight transactions processed by its information processing division to create the Index. The data comes from a Cass client base of 350 large shippers.

HOUSING, MANUFACTURING SLIP
The American Trucking Associations’ advanced seasonally adjusted Truck Tonnage Index fell 0.2% in April after rising 0.9% in March. Compared with April 2012, the index was up 4.3%, which is the largest year-over-year gain since January of this year (4.7%). Year-to-date, compared with the same period in 2012, the tonnage index is up 4%.

“The slight drop in tonnage during April fit with trends from other industries that drive a significant amount of truck freight, such as manufacturing and housing,” ATA Chief Economist Bob Costello noted in the report.

Like Wilson, Costello also said overall economic shifts – factory output slipped 0.4%, housing starts down 16.5% – created weakness in the trucking sector.

“After rising significantly late last year and in January of this year, truck tonnage has been bouncing around a narrow, but elevated band over the last three months.” he said. “It is also worth noting that the year-over-year comparisons are much better than expected just a few months ago and I’m hearing good comments about freight so far in May.”

INVENTORY ADJUSTMENTS
Wilson reported that March and April saw a trend in which inventory levels were being adjusted downward.

“Businesses have been drawing down inventories for the last two months based on expectations that the economy will be lethargic,” she noted in her Cass report.

The “bouncing around” narrative from Costello holds true for Fort Smith-based ABF Freight System, one of the nation’s largest less-than-truckload carriers.

ABF tonnage levels during the first quarter of 2013 were up 6.7% compared to the same period in 2012. However, April saw a 2% to 3% decline in revenues based on several factors, included a dip in billed revenue per weight.

“Quarterly tonnage levels have fluctuated significantly in recent years. ABF experienced quarterly decreases in year-over-year tonnage per day from third quarter 2011 through third quarter 2012, which were influenced by ABF’s initiatives to improve account profitability and led to year-over-year increases in billed revenue per hundredweight for each quarter of 2012,” noted the company’s most recent 10-Q filing with the U.S. Securities and Exchange Commission. “In fourth quarter 2012, ABF experienced a slight increase in tonnage levels versus fourth quarter 2011. The first quarter 2013 year- over-year daily tonnage increase compares favorably to first quarter 2012 tonnage levels, which were 10.6% lower than the same period of the previous year.”

Rail shipments for the week ended May 11 are up 2.2% compared to the same week in 2012, according to the Stephens Inc. “Weekly Rail Update.” Year-to-date, the carload numbers are up just 0.9%.

“Overall, the increase in industry volumes was driven by intermodal (+3.9%) and petroleum & related products (+50.5%). Coal volumes improved slightly (+0.8%) and the largest decline came from grain (down 21.6%),” noted the Stephens report.