United States freight shipments have declined for 11 consecutive months, eliminating the volume surge of 2018 and flattening the “Trump Bump,” according to the latest Cass Freight Index report. The shipments index dropped 5.9 percent year over year in October and fell 3.9 percent from September. But the index also dropped 0.1 percent from October 2017.
“The shipments index has gone from ‘warning of a potential slowdown’ to ‘signaling an economic contraction,’” Donald Broughton, founder and managing partner of Broughton Capital and author of the Cass Freight Index, said in the report. Broughton singles out the US trade war with China and disputes with other countries as the main factor in the “retrenchment.”
“We see it as an illustration of the highly stimulative effect of the corporate tax cut being completely abolished by the prosperity-destroying effect of the tariffs and ongoing trade dispute,” Broughton said. “Unfortunately, 2019 shipment volume has not only been below 2018 every month, but in October it has fallen below 2017 and 2014 levels.”
The Cass Shipper Expenditures Index, a measure of the change in freight rates, dropped 1.9 percent from September and was down 4.1 percent year over year in October. The expenditures index was still 7.4 percent higher than in October 2017, indicating that substantial contract rate gains carriers made in 2018 haven’t entirely eroded, unlike spot truckload rates.