Freight Market Extended Slump in May
The peak shipping season is starting off slow for trucking companies and railroads, which have struggled for months with weak demand
ENLARGE
Trucking demand is down from previous years in the latest Cass Freight Index. Photo: Associated Press
The Cass Freight Index, which tracks freight moved by rail and truck, rose just 1.3% in May from the previous month, and was down 5.8% from a year earlier. The reading was the lowest for May since 2009, and the biggest year-on-year drop since that year.
Retailers typically begin ramping up orders in the spring ahead of the back-to-school rush. The relatively small uptick in freight volumes measured by the index indicate sluggish economic growth and high inventory levels are reducing retailers’ shipping needs.
“We have failed to see the robust growth in shipments that we expect to see this time of year,” said Rosalyn Wilson, founder and president of supply chain consultancy FreightMatters and author of the Cass report.
Spending on freight declined 0.4% in May from April and 10.1% from a year earlier, a drop Ms. Wilson attributed to overcapacity and low fuel prices.
“The poor state of the global economy was the most cited reasons for the lack of optimism,” the report said, including one respondent who said they didn’t expect any peak season whatsoever.
Last year, the three busiest U.S. ports saw imports fall in September and October for the first time in at least a decade. Trucking companies began to report weaker-than-expected volumes around that time, and the market has yet to make a comeback.
The weak freight growth comes as other economic indicators are providing mixed signals. Though annual wages are rising and retail sales have grown, inventory levels are high and imports and exports have not increased substantially, Ms. Wilson said.
Railroad carload shipments increased 1.9% in May from April, the report said, but were 10.3% lower than the same month in 2015. Intermodal container shipments were up 2.1% in May from a month earlier, but 3.3% lower than May 2015.
Demand in the spot market for trucking was down in April, suggesting continued weakness, and port activity has also had limited positive impact on domestic transportation, Ms. Wilson said. The American Trucking Associations’ Truck Tonnage Index, which is expected to be updated this week, shows volumes declined between February and April.
