The Federal Reserve Bank of New York is starting to monitor supply chain pressures and their impact on inflation. The move reinforces the Fed’s understanding of the crucial role of the supply chain in the overall economy.
At Cass Information Systems, we’ve understood the criticality of an efficient and agile supply chain since our founding in St. Louis more than a hundred years ago. As spend management and business intelligence experts, we provide our clients with the tools to succeed in the complex world of supply chain.
We also help them sift through the noise to provide helpful information from throughout the industry. That includes predictions on when the freight recession will finally come to an end and continuing cautionary outlooks.
The Federal Reserve Bank of New York announced in mid-May it was launching the Global Supply Chain Pressure Index, which it will update on the fourth business day of each month.
“Supply chain disruptions have become a major challenge for the global economy since the start of the COVID-19 pandemic,” it said in the announcement. “Assessing the intensity of these issues has also posed a challenge, as conventional measures tend to focus on specific dimensions of global supply chains.
“Our goal in constructing the Global Supply Chain Pressure Index (GSCPI) was to develop a parsimonious measure of global supply chain pressures that could be used to gauge the importance of supply constraints with respect to economic outcomes.”
Reuters reported that the bank said supply chain pressures are a key driver of inflation, and the new index will help determine “how widespread supply disruptions are, understand if availability is improving, and track inflationary pressures and the impact on local firms.”
Outbound Tender Rejection Rate (OTRI) was the primary focus of the FreightWaves State of Freight webinar in May. FreightWaves Director of Market Intelligence Zach Strickland notes the importance of pricing indices, but he favors indicators such as OTRI and capacity indices to determine the market's direction.
While the latest OTRI numbers are nowhere near what they were just a few years ago, capacity is lower than last year, and demand remains steady. When key performance indicators like OTRI jump from 3.08% in April to nearly 5% in the middle of May, it signals an increase in market sensitivity. Strickland cautions shippers who are complacent with excess capacity will need to change their approach as the market continues to show signs of carrier favorability.
The Cass Freight Index report for April pointed to signs that U.S. freight demand is starting to increase, “but growth in shipments so far is mostly being handled by railroads and shipper-owned private truck fleets.”
ACT Research’s Tim Denoyer noted that “to the extent private fleets are successful filling backhauls, it will further delay the for-hire cycle. The good news is that they’re not nearly as cost-effective as for-hire fleets, so it will turn eventually.”
The Cass Freight Index has been a trusted measure of the North American freight market since 1995. Our monthly data empowers the carriers and logistics providers we support, providing valuable insight into freight trends as they relate to other economic and supply chain indicators and the overall economy.
Self-driving truck company Aurora has a goal of doubling its loads per week in 2024, according to Trucking Dive, which said it is now regularly scheduling more than 120 loads per week.
Aurora has been hauling loads for companies such as Schneider National, Hirschbach Motor Lines, and Uber Freight, driving a reported 1.5 million miles from September 2021 through April 30 of this year.
“With the partners we have in place, they have a lot of volume. They’re asking us to add weekends and nights to the lanes that we already have,” Aurora President Ossa Fisher told Trucking Dive. “And we’ll be adding more trucks to our fleet.”
Daimler Truck profits increased year over year in the first quarter of 2024, and Transport Topics said executives and analysts are optimistic about the company’s North American business.
“We had a positive start into 2024, delivering a robust profitability on lower sales volumes. Our first-quarter results clearly demonstrate: While markets are getting back to normal, our company delivers stable EDIT and return on sales,” Daimler Truck CEO Martin Daum said, according to Fleet Equipment.
CDL holders are trained to handle the size and weight of their vehicles, but that’s often not the case with vacationers pulling trailers or driving large recreational vehicles, according to The Trucker.
“Class A RVs are the size of passenger buses (in fact, they’re often built on the same chassis and foundation as buses), yet in many states, anyone who can afford the payments can drive one off the lot with no additional training,” trucker Cliff Abbott wrote.
As commercial vehicle systems become more intelligent, partnerships between fleets and suppliers become increasingly crucial, according to Fleet Equipment.
“Fleets gain access to innovative solutions that enhance their competitiveness, while suppliers receive valuable insights to fine-tune their offerings,” it said.
The Trucker quoted Avery Vise, FTR’s vice president of trucking, as saying, “We generally see rates steadily rising and turning to positive year over year by the third quarter. The forecast for this year is that spot rates overall will be up about a percent. Rates for dry van and refrigerated will be up a little bit stronger than that.”
Still, there are too many trucks competing for too little freight, The Trucker said, noting that “if there are too many trucks to haul the available freight – and the amount of freight is not expected to grow substantially, according to FTR analysts – then the number of available trucks must come down in order for rates to rise.”
At Cass Information Systems, we are the leading provider of global freight payment solutions, and we continue to roll out innovative solutions. In early May, we announced the launch of Amplify by Cass™, a working capital solution that supports both shippers and carriers. Amplify by Cass bridges the gap between a shipper’s efficiencies and desire to increase working capital and their carriers’ needs to be paid in a timely manner.
We are a trusted provider of quick pay programs, like Cass Expedite®, which enables carriers to optimize their operations and scale effectively through payment programs that are fast, flexible, and simple.
Contact Cass to find out more.