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Drop in Shipment Volume in November Note Welcome, But Not Unexpected

North American shipment volume continued on a downward path in November, according to the Cass Freight Index. The dip was not unexpected, as this is the same weak year-end movement observed for the last three years. Stronger than expected manufacturing activity and shipments of seasonal goods offset a general slowing of freight movements to temper the drop in shipment levels.

Expenditures rose just slightly, largely because of a surge in spot market rates the last week of the month. The November shipment index is 1.1 percent higher than a year ago and 4.6 percent higher than November 2011. On a month‐to‐month basis, November’s 1.0-percent drop from October was an improvement on the 3.5-percent drop the previous month. The Institute for Supply Management’s PMI index for production rose 3.3 percent in November, largely on the strength of export production. Export goods shipments and the seasonal jump in food and beverage shipments were not strong enough to overcome the drop in shipments for items such as apparel, appliances and electronics.

The National Retail Federation reported that Thanksgiving/Black Friday sales fell 2.7 percent, the first drop in seven years. Online sales were brisk, however, which bolstered small package shipments at the end of the month.

In freight:

• The weekly railroad traffic reports from the Association of American Railroads showed carload shipments up 2.7 percent, but inconsistently – up two weeks and down two weeks

• Meanwhile, intermodal shipments slowed over the month, posting a 1.0-percent year‐over‐year gain in November after rising 2.5 percent in October

• Truck tonnage fell 3.7 percent in October (the latest figure available) according to the American Trucking Associations

• Spot market shipment volume fell off substantially in November across the board

• Refrigerated loads surged in the final week of the month due to the Thanksgiving holiday

Given the current high levels of inventory, it is not surprising that the number of shipments is not growing – even in spite of the anticipated 3.9-percent rise in holiday sales over last year.

Freight expenditures for November rose 0.6 percent, with virtually all of the increase attributable to strong spot market rates in the last two weeks of the month. TransCore’s DAT Trendlines reported that end‐of‐month spot market activity was strong for van and flatbed loads, pushing average rates up two cents per mile.

We’re seeing mixed economic signals as we approach the end of the year. Many indicators have improved during the last several months, including new home sales, new jobs, new export orders, and manufacturing production, new orders and backlog. Exports rose in recent months, but largely based on the strength of oil product exports. Container exports and imports, largely aimed at the consumer market, have trended downward. Despite the better than expected third quarter GDP, the fourth quarter will not be as strong.

December is likely to provide a weak finish to a relatively weak 2013 for the freight industry.

Source: Cass Information Systems

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