Rates surge, no ‘significant rate relief’ in 2021, Cass says
February 19, 2021
(FreightWaves) Data released Thursday by Cass Information Systems (NASDAQ: CASS) highlighted advances in the company’s shipments and expenditures indexes during January. The shipments component increased 8.6% year-over-year with the expenditures index surging 19.5%.
The data showed shipments improved 3% from December on a seasonally adjusted basis, which was the largest move since September.
“This acceleration takes us another step closer to the strong growth environment which we expect to continue in 2021, due in no small part to easy comparisons,” according to the report’s author, ACT Research’s Tim Denoyer.
Compared to January 2019, the shipments index is still 1.6% lower.
Expenditures, up 2.8% seasonally adjusted from December, grew at a faster rate during the recent month, in large part due to the volume increases. Excluding a few months in 2018, the January grow rate was the fastest pace reported since the 2009 to 2011 period.
“As these higher volumes meet rising contract rates, it is clear that this index is headed for growth rates over the next several months not seen since 2010-2011,” Denoyer added.
The truckload linehaul index, a measure of linehaul rates on a per-mile basis excluding fuel and accessorials, moved 7.3% higher year-over-year in January and 2.3% higher from December. This was the seventh straight month of sequential increases in the index, which is now up 8.1% since June.
The report acknowledged some “slowing in spot rates and consumer spending recently,” but said the capacity dynamic remains tight. “With additional federal stimulus likely to drive more consumer spending; lean inventories; and a long backlog of ships at U.S. ports, we expect the Cass Truckload Linehaul Index to continue to improve in the near-term.”
Implied freight rates, or expenditures divided by shipments, jumped 10.1% year-over-year. The increase shows that freight spend is increasing at a much faster pace than shipment growth. The implied rate has been in positive territory for five of the past six months. TL represents more than half of freight spend in the dataset.
On the capacity front, the report stated that parts and semiconductor shortages, partly due to West Coast port congestion, will impede production at the truck original equipment manufacturers, resulting in further delays delivering the equipment needed to ease capacity constraints.
Looking forward, rate relief does not appear to be on the horizon. “To address a frequently asked question of late, we do not expect 2021 to repeat the significant rate relief shippers experienced in 2019,” Denoyer concluded.
Data used in the Cass indexes is derived from freight bills paid by Cass, a provider of payment management solutions. Cass processes $28 billion in freight payables on behalf of more than 8,000 subscribers annually.
To Read More: https://www.freightwaves.com/news/rates-surge-no-significant-rate-relief-in-2021-cass-says
Do You Need Brokerage Help? You can contact us at firstname.lastname@example.org