Visit Our Sponsors
After five months of increases, shipment volumes decreased 3.9 percent in July, still coming in 4.2 percent higher than shipment activity a year ago, according to analysis from Rosalyn Wilson, senior business analyst with Parsons, where she leads the Real-Time Freight Intelligence team.
The Institute for Supply Management’s June PMI slipped down slightly, which had some effect on July freight shipments. July’s PMI, on the other hand, rose 3.2 percent, with the New Orders Index rising a healthy 7.6 percent. Railroad carload traffic dropped off the first week of July, but increased throughout the rest of the month. Intermodal loading fell off the first week of July, rose for two weeks and declined again in the last week. Truck tonnage dropped off in June according to the latest American Trucking Associations report, and anecdotal evidence suggests that July was a lackluster month as well.
On the expenditures side, the July freight expenditures index fell in tandem with freight shipments, dropping 3.9 percent from June figures. July 2014 payments for freight are 6.7 percent higher than the corresponding month a year ago. There was not much change in rates in July as capacity loosened with the drop in shipments. That said, in recent weeks LTL carriers have been reporting that their pricing is starting to strengthen, a sign that across-the-board price hikes could be on the horizon.
The softness in the freight transportation market in July should not be seen as part of a longer-term trend downward. Even prior to the recession, the summer months were slower before the season rise for the holidays. Retailers are still sitting on higher inventories and being cautious about the orders they are placing for new stock. The turnaround in China’s PMI index for Export Orders and the continued growth in the U.S. manufacturing sector indicate that freight shipments should be strong in the last four or five months of 2014. The first estimate of second quarter GDP was a growth rate of 4.0 percent, a significant turnaround from the 2.1 percent contraction in the first quarter. Corporate profits are strong, while consumer sentiment and household wealth are rising, putting both groups in a position to spend more this year.
Source: Cass Information Systems
Enjoy curated articles directly to your inbox.