The Cass Freight Index for May is in, and it’s disappointing. We’re talking shipments and expenditures both falling more than 20% annually, even more so than in April. The Intermodal Price Index declined from April to May, and also fell on a yearly basis.
Here’s what David Ross, the report’s author had to say: ‘We were surprised not to see more of an uptick; the re-opening schedule appears to have unfolded slower than we anticipated—and also because the freight data reported by some of the public companies (LTL carriers and rails specifically) showed a more significant sequential jump and better [annual] improvements than Cass showed. June is normally the best month of the second quarter, and we’d expect a significant improvement in the Cass Index this month—even if still well below year-ago readings. We do not believe we will reach 2019 freight activity until 2021 (at the earliest) due to the significant rise in unemployment and other results of government intervention.’
Shipments improved slightly since April, but saw a 23.6% fall from May 2019 levels. Expenditures fell by 5.7% from April to May, and shrank by 21.2% annually. In comparison, shipments fell 22.7% annually in April, and expenditures contracted by 18.2% year-over-year last month.
The intermodal price index slumped by 17.8% on an annual basis, and by 11.9% month-over-month.
This is the worst reading since the 2008-2009 financial meltdown, and may put a damper on all the recovery chatter we have been hearing as of late. Thus far, most industry analysts have suggested freight bottomed in April and that May saw a definitive turnaround.
‘With all the talk about potential shapes the recovery could take, we feel comfortable removing a “V” from that discussion’, Stifel wrote. ‘The long-term effects of sky-high unemployment and 0% interest rates should be quite negative and sufficient this year to suppress any kind of sharp rebound in activity.’