Cass Freight Index Shows Sustained COVID-19 Impact

The May Cass Freight Index shows that the COVID-19 impact on the logistics industry hasn’t and isn’t slowing down. There are still major implications on freight volumes and expenditures at a recessionary level due to the pandemic shutdown. In fact, this recent Cass report states that these numbers actually mark the worst market reading since the global financial crisis.

Both shipments and expenditures are showing minimal signs of improvement this spring following the first COVID-19 wave. Both indexes came in less than 20% below May 2019, which is a significant drop that could have long-lasting impacts on the U.S. and intercontinental economy.

To counter some of this impact, many logistics companies have turned to a combination of robust TMS platforms and automation tech to help manage and streamline certain processes. By doing so, a lot of the strain on operations is lessened. To learn how you can follow this solid strategy, reach out to the Redwood team, and let our experts show you how our RedwoodConnect 2.0 platform can help you weather the ongoing impact of COVID-19.

About Cass Freight Index

The Cass Freight Index is widely regarded as the most accurate barometer of logistics market conditions. Coming out of Cass Information Systems, the Cass Freight Index has been the most trusted measure of the North American freight market (and the overall economy) since 1995. This monthly report looks at data from about 36 million invoices of intra-continental freight shipments to get a broad sampling of industries including consumer packaged goods, automotive, chemical, food, OEM, medical, retail, and heavy equipment. It analyzes freight volumes and expenditures to come up with a data-driven report about the current monthly status of the industry.

The shipments index looks at the volume as well as the revenue of shipments from the available data. The expenditure index measures the total dollars spent on freight transportation, including both contract and spot market rates.

Freight shipments on Cass Freight Index

May freight shipments (volume) came in at 0.938 on the index, meaning that they fell 23.6% this year over May 2019. These May numbers are even slightly worse than April’s 22.7% annual decline over April 2019.

This tells us that the U.S. economy is still taking a hit from the pandemic. Although the stock market surged in mid-May, we saw a recent market pullback that reflects the Cass Index findings.

Expenditures on Cass Freight Index

The May expenditures index came in at a 2.243, which is an annual decline of 21.2% compared to May 2019. It’s also about 5.7% lower than April, which iterates the findings of the freight shipments index. The economy isn’t as strong as some would like to make it seem (or hope that it is).

What’s causing this decline?

It’s surprising, and even a little disheartening, to see that there isn’t an uptick in the logistics industry in May. There are several reasons for the continued weakness.

• The reopening schedule is unfolding slower and more variable than expected
• The pandemic has highlighted supply chain weaknesses that companies are working quickly to address
• Cass looks at public companies, not at private companies which may be showing better annual improvements
• Logistics is a fast-moving industry with slow-moving data

Revenue increase

Although shipment volume and expenditures are down, the revenue per shipment has seen a 3.1% increase in May. A lot of businesses have had to shut down, which has dropped the volume and expenditures; but those companies that were able to stay open seem to have a higher freight cost per shipment. This is likely due to longer-than-average haul lengths and lower fuel surcharges. This seems to be offsetting some concerns with regards to freight budgets for businesses looking to grow on an upward trajectory the rest of 2020. This is a silver lining for businesses who are still working diligently to deliver to consumers.

Market future according to Cass Freight Index

June is typically the best month of the second quarter each year. The Cass reporters seem hopeful that there could be an improvement in the freight index this month compared to April and May, although they expect it will still be much lower than June 2019.

It’s unlikely that we’ll reach the same sort of freight activity that we saw in 2019 until 2021 at the earliest. There is a hefty rise in unemployment, a lot of government intervention, and a major demand strain on the industry that is making it challenging for transport partners to keep up. The economy isn’t as hearty as it needs to be to push logistics back on the trend it was at the end of 2019.

Still, there’s optimism in the numbers. Volume and expenditure are still at significantly deflated levels. However, the revenue per shipment indicates that there’s a strain of business health we can hold on to.

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