Cass notes ‘signs of price stabilization’ in soft September update

September data from Cass Information Systems showed “signs of price stabilization” even as volumes continued to reflect a soft demand environment.

The Cass Freight Index showed shipments fell 5.2% year over year during September and 2.6% from August when seasonally adjusted. The y/y decline was the largest since June, outpacing declines of just 1.9% in August and 1.1% in July, and worse than the forecast calling for the dataset to be down just 3% during the month.

The freight volume index is now expected to fall 3% y/y in October and 4% to 5% for 2024, which is 1 percentage point worse than the expected range provided a month ago.

September 2024	y/y	2-year	m/m	m/m (SA)
Shipments	-5.2%	-11.2%	-1.7%	-2.6%
Expenditures	-6.6%	-30.3%	2.4%	1.0%
TL Linehaul Index	-3.4%	-12.3%	0.3%	NM

Table: Cass Information Systems (SA – seasonally adjusted)

The Monday report pointed to the “insourcing of freight from the for-hire market to private fleets” as a headwind that has endured for more than a year, and “the defining feature extending the soft freight cycle.”

It said stricter enforcement of the Federal Motor Carrier Safety Administration’s Drug & Alcohol Clearinghouse, which starts next month, could impact “tens of thousands of CDL holders,” potentially playing “a key role in a market turn in 2025.”

The freight expenditures index, which captures total freight spend, fell 6.6% y/y in September (the second-smallest decline this year). A roughly 4% dip in diesel prices from August to September was a partial contributor to the decline. The index was up 1% seasonally adjusted from August but remained more than 30% below 2022 levels.

The expenditures index was again forecast to be down 11% to 12% for full-year 2024.

With shipments down 2.6% but expenditures up 1%, actual rates, or “inferred freight rates,” were likely up 3.8% (seasonally adjusted) from August. Inferred rates are expected to decline 7% y/y in 2024 after a 14% decline last year.

The Truckload Linehaul Index, which tracks linehaul rates excluding fuel and accessorial surcharges, increased 0.3% sequentially in September. This was the first sequential increase in linehaul rates since April. A y/y decline of 3.4% was in line with recent declines logged by the index.

The dataset includes changes to both spot and contract freight.

“Spot rates have started to increase, but although we’ve heard of isolated instances of contract rate increases, contract bids remain very competitive,” the report said.

Data used in the indexes is derived from freight bills paid by Cass (NASDAQ: CASS), a provider of payment management solutions. Cass processes $38 billion in freight payables annually on behalf of customers.