Spot and contract freight rates appear to be stabilizing at their lowest points, according to Cass Information Systems’ April report on its Freight Index and Truckload Linehaul Index. The report indicates that, despite ongoing challenges, a potential recovery could be on the horizon.
Freight Index and Shipment Volumes
Cass’s Freight Index, which measures for-hire shipment volumes, showed a decrease both month-over-month and year-over-year. The index dropped to 1.098, down 1.6% from February (seasonally adjusted) and 4% from the previous year. This decline indicates that demand for for-hire shipments remains subdued.
Tim Denoyer, VP and senior analyst at ACT Research and author of the Cass Freight Index report, attributes part of this decline to increased hiring by private fleets. He noted that private fleets have been expanding their capacity, which has led to them competing more aggressively for spot freight to fill empty backhauls. This competition has kept for-hire demand below trend levels.
Truckload Linehaul Index
The Truckload Linehaul Index from Cass, which tracks per-mile rates excluding fuel and accessorial costs for both spot and contract rates, provides further insights. The index rose slightly to 141 in April, marking a 0.1% increase from March but a 3.8% decrease from the previous year.
Interestingly, the Truckload Linehaul Index has remained relatively flat over the past ten months. Since June 2023, monthly changes in the index have stayed within a narrow ±0.6% range, indicating a period of stability in linehaul rates despite the broader market volatility.
Implications for the Freight Market
The minimal movement in the Truckload Linehaul Index suggests that the freight market may have reached a bottom in terms of rates. This stability, coupled with the observed trends in shipment volumes, points to the possibility of an impending upturn in freight rates. However, the persistent low demand for for-hire shipments underscores the continued challenges faced by the industry.
As private fleets continue to adjust their capacity and compete for available freight, the overall market dynamics will likely evolve. For now, the data from Cass Information Systems provides a cautious optimism that the freight market could be poised for a recovery, albeit gradual.
In conclusion, while the freight market remains down compared to last year, the stabilization in freight rates and shipment volumes suggests that the worst may be over, and an upturn could be on the horizon.
Source:
Leave a Comment