Shipments measured by the Cass Freight Index declined 1.1% in August from the same month last year and from July 2012, reflecting the steadily weakening economic pace.
The index, which primarily is based on truck freight bills paid by a subsidiary of Cass Commercial Bank, now has declined on a year-over-year basis in three of the eight months so far this year. However, stronger shipments during the first half of 2012 leave the index 8% ahead of last year after eight months.
The Sept. 6 report from Cass reinforces comments from truckers who spoke at the Dahlman Rose & Co. investor conference in New York earlier this month.
“Building inventories, declining new orders and backlogs, and falling consumer and business confidence in short-term economic growth are all pointing to a flat-to-declining freight market in the coming months,” said the Cass report, written by economist Rosalyn Wilson of Delcan Corp.
Like the speakers at the recent investor conference, Wilson also noted mounting politically related concerns.
“Uncertainty regarding taxes — as well as other issues that hinge on this year’s election — has bred a sense of uneasiness and unwillingness to move forward,” she said in the report, which is based on Cass Information Systems Inc. data that also include rail, barge and airfreight shipments.
“Weak conditions in both the U.S. and global economies have led to the continued decline in freight shipments,” Wilson wrote. “Inventories are building beyond the levels needed to support expected sales, and many retailers and manufacturers have pulled back on restocking.”
She cited the Institute for Supply Management’s August report showing a downward trend, as well as retail surveys that showed caution among consumers and deep discounting by retailers.
Wilson’s report noted that the softness isn’t confined to the United States.
“The U.S. is not alone and, in fact, is being greatly impacted by global economic conditions,” the report said. “Chinese production has hit a three-year low, and both Korea and Japan have revised GDP estimates downward after year-over-year declines in industrial production.
“Measures of business confidence and manufacturing activity, including new orders and backlogs, are deteriorating worldwide,” Wilson added in the report.
