Cass Transportation Index Report November 2023

Painful Peak Season Proceeds

For fleets, not shippers

Cass Freight Index - Shipments

The shipments component of the Cass Freight Index® fell 1.3% m/m and 8.9% y/y in November, after a 9.5% y/y decline in October. The y/y declines remain exaggerated by unusual excess inventory repositioning in 2H’22.

• In seasonally adjusted (SA) terms, the index was essentially unchanged, up 0.3% m/m.
• 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.
• The 2023 peak season has been decidedly soft in the for-hire market, as real retail sales are still down from year-ago levels. Overall U.S. freight volumes are more flattish on a y/y basis as private fleet insourcing persists, in our view.

The acceleration in real disposable incomes, supported by a surprisingly sharp disinflation, and the ongoing strong labor market suggest demand fundamentals will improve in 2024.

With normal seasonality, this index would be down 3%-4% m/m in December, leaving it down about 9% 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 1.3% m/m and 26% y/y in November.

With shipments down 1.3% m/m, we infer rates were flat m/m in November (see our inferred rates data series below).

• Seasonally adjusted (SA), the expenditures index rose 0.9% m/m, with shipments up 0.3% and rates up 0.6%.

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

The expenditures component of the Cass Freight Index rose 23% in 2022, after a record 38% increase in 2021, but is set to decline about 18% in 2023 and another 14% in 1H’24, assuming normal seasonal patterns from here. Both freight volume and rates remain under pressure at this point in the cycle. 

Inferred Freight Rates

The rates embedded in the two components of the Cass Freight Index declined 18% y/y in November, after falling 15% in October, as significant freight rate deflation continued. Only about 2 percentage points of the decline are due to fuel at this point.

• Cass Inferred Freight Rates™ rose 0.6% m/m SA, following a 0.5% increase in October. While this followed an outsized 3.3% m/m drop in September, the stabilization is notable and similar to the slowing declines in the Cass Truckload Linehaul Index.
• Based on the normal seasonal pattern, this index would rise m/m in December, with the y/y decline narrowing to 16%.

With spot rates stabilizing, sequential declines are likely to slow from here, but the freight market is delivering significant savings to shippers this holiday season.

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.

Download the Data

Truckload Linehaul Index

The Cass Truckload Linehaul Index, which measures changes in linehaul rates, fell 0.3% m/m in November to 140.7, after a 0.6% m/m decline in October.

• The November level was a new cycle low and down 7.5% y/y, but shows further stabilization. On a y/y basis, the Cass Truckload Linehaul Index fell 8.3% y/y in October, after a 9.1% y/y decline in September.
• Since June, the index has declined an average of 0.2% m/m, suggesting further moderation in y/y declines.
• As a broad truckload market indicator, this index includes both spot and contract freight. With spot rates stabilizing over the past several months, downward pressure on the larger contract market is lessening, with a few instances of contract rate increases bucking the downtrend of late.
  
  
  

See the Methodology for the Cass Truckload Linehaul Index

Freight Expectations

We continue to expect modest y/y growth in consumer spending this holiday season, driven by the acceleration in real disposable incomes and the ongoing strong labor market. The recent easing in fuel prices improves our confidence that peak season will end on a higher note.

General economic conditions remain better than those in the for-hire freight market. Although private fleet capacity expansion continues to pull freight from the for-hire market, supply patterns are changing. In addition to falling pent-up capital spending, low freight rates are driving net revocations of operating authorities to a record net pace. The surprising strength in the economy in 2023 may provide less support for freight in 2024, but supply contraction should propel the cycle forward in 2024, causing the trajectory of rate trends to change, even if the broad economy slows, even if the broad economy slows. 

Our outlook is for freight markets to keep bouncing along the bottom in the near term, followed by some holiday volatility and a change in trajectory next year, and 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 their forecasts performed? For 2022, ACT’s forecasts for the shipments component of the Cass Freight Index were 97.5% accurate on average for the 24-month forecast period. Our January 2021 forecast, two full years out, was 99.8% accurate. 

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

ACT Research’s full-year 2022 DAT spot rate forecasts were 99.7% accurate from Q2’21 (19-21 months out) for dry van and 98.5% for reefer. DAT dry van spot rates, net fuel, finished 2022 at $2.06 per mile, in line with our forecasts to the penny from 18 and 19 months out (June and July 2021). 

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