Cass shipments data declines in June. (Photo: Jim / )
“Inventory has shifted from a major tailwind for freight demand to more of a neutral factor currently, with potential to become a considerable headwind if goods demand continues to decline,” ACT Research’s Tim Denoyer stated in the June Cass report.
Cass reported that the shipments index dipped 2.3% y/y in the month, following a 2.7% decline in May. While the index continues to moderate from 2021 levels, it was still 23.9% higher than the level recorded two years ago and 1.9% higher than June of 2019.
Assuming normal seasonality holds in the back half of the year, the shipments index is forecast to see y/y declines of 1% in the third quarter and 5% in the fourth quarter.
| June 2022 |
y/y |
2-year |
m/m |
m/m (SA) |
| Shipments | -2.3% | 23.9% | -2.6% | -4.1% |
| Expenditures | 25.0% | 95.5% | 8.8% | 8.3% |
| TL Linehaul Index | 11.6% | 27.8% | -1.8% | NM |
Table: Cass Information Systems. SA (seasonally adjusted)
Freight costs hit all-time high
The expenditures index reached an all-time high in June, jumping 8.3% from May on a seasonally adjusted comparison. The index measures the total amount spent on freight.
Inferred rates, or expenditures divided by shipments, were up 11.7% in June, wiping out the 9.8% sequential decline seen in May. Mix had a big influence in the month as higher-priced truckload shipments accounted for a larger portion of total shipments. Less-than-truckload volumes were a smaller percentage of the freight mix.
The expenditures index was also 25% higher y/y and 95.5% higher than June of 2020. The report estimates that roughly 10 percentage points of the y/y change was tied to higher diesel fuel prices.
LTL rates were up sequentially in June by an undisclosed amount.
Denoyer said normal seasonality will likely keep the index in positive territory through the end of the year, with December logging only a 2% y/y increase. The data set was up 32% in the first half of 2022 compared to the same period in 2021.
The TL linehaul index, which excludes fuel and accessorial surcharges, fell 1.8% from May. However, the index was 11.6% higher than June of last year and 27.8% higher than June of 2020.
“After an extraordinary truckload rate cycle, the market balance has shifted, with capacity now growing briskly and demand falling, which will limit further upside in the Cass Truckload Linehaul Index and likely press it lower in the coming months,” Denoyer said.
The y/y increase in the linehaul index during June was the lowest this year but in line with the average of increases reported throughout 2021.
Morgan Stanley survey sees ‘tumultuous times ahead’
“While the extent of the decline signals something more than just a ‘normal’ destocking-driven transportation slowdown (i.e. 2019) but less than a broad recession (i.e. /09), as one broker put it, we expect ‘tumultuous times ahead’ either way and look to next quarter for more definitive signs of its ultimate magnitude,” analyst Ravi Shanker commented in the report.
A recent shipper survey conducted by the firm registered the fourth-lowest economic outlook from respondents in the 20-year history of the data.
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