Cass Transportation Index Report December 2023

Freight Rates Steadying

Cass Freight Index - Shipments

The shipments component of the Cass Freight Index® fell 1.6% m/m in December but increased 2.1% m/m in seasonally adjusted (SA) terms, as volumes fell less than normal in the holiday shortened month.

• On a y/y basis, the index declined 7.2% y/y, after an 8.9% y/y decline in November.
• U.S. freight volumes, as measured by the Cass Freight Index®, have fallen for most of the past two years, similar to prior downcycles in both length and magnitude, except for the pandemic downturn.
• After rising 0.6% in 2022, the index declined 5.5% in 2023.

With historical seasonality, this index would be down 1%-2% m/m in January, leaving it down about 8% y/y.  

See the Methodology for the Cass Freight Index

Cass Freight Index - Expenditures

The expenditures component of the Cass Freight Index®, which measures the total amount spent on freight, fell 3.0% m/m and 24% y/y in December.

With shipments down 1.6% m/m, we infer rates were down 1.5% m/m in December (see our inferred rates data series below).

• Seasonally adjusted, the index rose 0.1% m/m, with shipments up 2.1% and rates down 2.0%.  

This index includes changes in fuel, modal mix, intramodal mix, and accessorial charges, so it’s a bit more volatile than the cleaner Cass Truckload Linehaul Index®.

U.S. freight spending, as measured by the expenditures component of the Cass Freight Index®, fell 19% in 2023, after a record 38% surge in 2021 and another 23% increase in 2022. It’s set to decline about another 14% in 1H’24, assuming normal seasonal patterns from here. 

Inferred Freight Rates

The rates embedded in the two components of the Cass Freight Index® declined 18% y/y in December, after a similar decline in November.

• Cass Inferred Freight Rates fell 2.0% m/m SA, after two consecutive monthly increases. While this represented a new cycle low in SA terms, inferred rates were higher in December than September in nominal terms. The stabilization is similar to the trend in the Cass Truckload Linehaul Index®.
• Based on the normal seasonal pattern, this index would rise about 2% m/m in January, with the y/y decline narrowing to 16%.
• The normal seasonal pattern from here would put inferred rates down 11% y/y for 1H’24.

Cass Inferred Freight Rates are a simple calculation of the Cass Freight Index data—expenditures divided by shipments—producing a data set that explains the overall movement in cost per shipment. The data set is diversified among all modes, with truckload (TL) representing more than half of the dollars, followed by less-than-truckload (LTL), rail, parcel, and so on.

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Truckload Linehaul Index

For just the second time in the past 18 months, the Cass Truckload Linehaul Index® rose m/m in December, by 0.4% to 141.3.

• The 6.1% y/y decline was the narrowest in ten months.
• The December index level was in line with August, and just 1% below the May level as the market rebalances and stabilizes.

As a broad truckload market indicator, this index includes both spot and contract freight. With spot rates steady over the past several months, downward pressure on the larger contract market is lessening, with some instances of contract rate increases bucking the downtrend of late.

See the Methodology for the Cass Truckload Linehaul Index

Freight Expectations

Global ocean shipping disruptions will likely add to air and land freight movements in 2024. The two primary routes from Asia to the U.S. East Coast have been snarled by conflict in the Red Sea and low water in the Panama Canal, which is essentially a perfect storm restricting access to the U.S. East Coast. We think the West coast ports and intermodal network will continue to experience elevated demand as a result.

Destocking and declining goods consumption have been key features of the freight recession, but both cycle drivers seem to be starting to reverse course. Real retail sales recently turned positive after a year of declines, and after 18 months of destocking, a restock is drawing near, likely spurred by ocean risks.

The acceleration in real disposable incomes, supported by a surprisingly sharp disinflation, and the ongoing strong labor market suggest freight demand fundamentals will improve in 2024. While helped by easy comparisons, recent railroad trends suggest the next phase of the cycle could be coming around the bend. 

Our outlook through 2025 is detailed in the ACT Research Freight Forecast. This service provides in-depth analysis and forecasts for a broad range of U.S. freight measures, including the Cass Freight Index, Cass Truckload Linehaul Index, and DAT spot and contract rates by trailer type, LTL, and intermodal price indexes. We provide monthly, quarterly, and annual predictions for over forty data series over a two- to three-year time horizon, including capacity, volumes, and rates. The ACT Research Freight Forecast is released monthly in conjunction with the Cass Transportation Index report.

How have ACT Research’s freight forecasts performed? For 2023, ACT’s forecasts for the shipments component of the Cass Freight Index were 96.9% accurate on average for the 24-month forecast period. 

(As a reminder, ACT Research’s Tim Denoyer writes this report.)

ACT Research’s 2023 forecasts for the Cass Truckload Linehaul Index were 96.6% accurate on average over the past 24 months, and 98.5% accurate over the past 12 months. The Cass Truckload Linehaul Index averaged 143.8 in 2023, precisely in line with our July 2023 estimate. Typically, the surprises to both our volume and rate forecasts were in the direction of the trend.

Release date: We strive to release our indexes on the 13th of each month. When this falls on a Friday or weekend, our goal is to publish on the next business day.

About the Indexes

• Cass Freight Index
• Cass Truckload Linehaul Index