By Ben Meyer – American Shipper –

Shipment volumes for the month grew 0.5% from February and 0.9 % from March 2016, while expenditures were down 1.2 % sequentially but up 3% year over year, according to the latest Cass Freight Index Report.The North American freight market showed continued, albeit slowing, growth in March 2017, with volumes registering the fourth year-over-year increase in as many months after slipping back into negative territory in November 2016, according to the latest Cass Freight Index Report.
Shipment volumes in March grew 0.5 percent from the previous month and 0.9 percent compared with the same 2016 period following year-over-year increases of 1.9 percent in February, 3.2 percent in January and 3.5 percent in December 2016. The December increase followed a decline of 0.5 percent in November and an October in which shipment volumes stemmed a 20-month free fall, registering their first year-over-year growth since March 2015.
Donald Broughton, an economist with Avondale Partners and author of the report, said the continued growth trend suggests the October increase was more than just a blip on the radar.
“Throughout the U.S. economy, there are a growing number of data points suggesting that the economy is getting better,” said Broughton. “Some data points are simply less bad, but an increasing number of them are better, and even a few are becoming outright strong. The 0.9 percent year-over-year increase in the March Cass Shipments Index is yet another data point which suggests that the first positive indication in October may have indeed been a change in trend. In fact, it now looks as if the October Cass Shipments Index, which broke a string of 20 months in negative territory, was one of the first indications that a recovery in freight had begun in earnest.
“Although the 0.9 percent March year-over-year change looks weaker than the 1.9 percent  February year-over-year change, we should point out that March 2016 was one of the least negative months for the shipments index and hence serves as a tougher comparison,” he added.
Broughton noted that unlike in February, when shipments jumped 7 percent from the previous month, the March sequential pattern looked less promising.
“Instead it appears that January was well below trendline, February was well above, and March simply settled in near the true trendline (sequentially January down 6.4 percent, February was up 7.0 percent, and March was up 0.5 percent),” he wrote.
Freight expenditures for the month also showed growth on a year-over-year basis, up 3 percent from the previous March, but fell 1.2 percent compared with February. Still, the March figures represent only the third year-over-year increase in 23 months. Shipping payments in January and February grew 4.3 percent and 3.2 percent, respectively, from the previous year after contracting 3.8 percent in September, 3.8 percent in October, 4.5 percent in November, and 3 percent in December.
Broughton said the improvement came against a slightly tougher comparison in February and March 2016 than in January, when expenditures fell to a five-year low due to weak demand and a monumental drop in crude oil prices to below $30 a barrel. He said the continued growth can be attributed primarily to a steady rise in the price of fuel, as well as “some improvements” in pricing power of trucking and intermodal carriers.
According to Broughton, a fundamental rule of marketplaces is that “volume leads growth,” meaning that shipment volumes generally increase in advance of pricing.
“We have been questioning, ‘How fast will the recovery from here be?’” he said. “However, the overall freight recession, which began in March 2015, appears to be over and, more importantly, freight seems to be gaining momentum.”
March volumes continued to be driven by “outstanding” growth in e-commerce parcel shipments, with FedEx and UPS reporting “strong” U.S. domestic volumes, the logistics payment solutions provider said.
Airfreight volumes in February (the most recent month for which data is available) also continued to show improvement, up 17.1 percent in the Asia Pacific trade lane and 3.4 percent in the Europe Atlantic, following respective increases of 8 percent and 5.9 percent the previous month, according to Avondale’s proprietary air cargo index.
Rail volumes in the last two years have contributed significantly to the overall decline in the North American fright market, but have become “increasingly less bad,” and in recent weeks have actually turned “decidedly” positive, albeit against a “very easy comparison,” said Broughton. According to data from the Association of American Railroads (AAR), U.S. Class I railroad traffic, which had seen “persistent weakness” for the past two years, grew 7.4 percent for carload and 5.4 percent for intermodal in March.
U.S. rail volumes have suffered from a combination of declining prices for energy commodities like coal and oil, a strong U.S. dollar and weak domestic industrial production driving fewer exports, but the latest data “suggests that the higher price of crude (WTI $53 as we write this) is driving increased activity in oil and gas exploration as companies with DUCs (drilled uncompleted wells) are choosing to proceed with fracking operations,” Broughton added.
“Just as the dramatic drop in fracking led us into the industrial recession in March 2015, it now appears to be in the early stages of leading us out,” he said. “Bottom line, rails may not serve as a drag to the overall Cass Freight Shipments Index in coming months, but instead are starting to be a positive.”
The trucking industry has provided mixed results of late, as tonnage seems to be growing, but loads have contracted in four of the last seven months, according to the report. In January, the American Trucking Associations (ATA) reported tonnage was up 3.2 percent, bringing the three-month moving average growth rate to 1.6 percent, but Cass said February tonnage slid 2.8 percent, pulling the three-month average down to negative 0.13 percent.
“The bottom line: trucking industry data released by the ATA was getting better and gaining momentum, but recent tepid results by brick-and-mortar retailers appear to be taking their toll,” said Broughton.
The Cass Freight Index is based on domestic freight shipments of hundreds of the company’s clients across a wide variety of industries. Cass Information Systems processes more than $26 billion in annual freight payables.