Cass: September sees rise in shipments, payments after 2-month decline

admin     29 Oct,2015         No Comment

September is often the final growth spurt for the year, Cass said its records show.

The number of freight shipments increased 1.7 percent in September, reversing a two- month slide.

This is a traditional month for a rise because shippers are receiving goods for the holiday season, the Cass report said. The strong U.S. dollar and a sluggish global economy are continuing to make imports very attractive.

Freight payments rose 2.4 percent, which coincides with an increase in shipments.

Spot prices have been lower because of adequate capacity during the slowdown in August, the report said, noting that trucking companies are holding rate increases down, and offering capacity guarantees in exchange for higher rates.

There has also been a steady growth in dedicated carriage agreements.

“We expect rate increases for the trucking sector to be modest through the end of the year,” Cass officials said. “The exceptions are UPS and FedEx, which have already announced a round of price increases that will go into effect in November, just as the holiday shipping season begins to heat up.”

Many factors are affecting the current volume of freight, not the least of which is mounting inventory levels, Cass said.

All business inventories are continuing to grow, as are inventory‐to‐sales ratios, indicating that the freight industry is not at optimal levels given inventory turnover rates, Cass said.

In the first half of 2015, retail inventories rose 2.9 percent, compared to only 2.3 percent for all of 2014; manufacturing inventories increased 3.0 percent, compared to a decline of .25 percent in 2014. Wholesale inventories are up 2.3 percent in 2015, compared to 3.9 percent in all of 2014.

Low interest rates, favorable import prices and moderate storage costs have encouraged the buildup, but even a 1 percent rise in interest rates could fuel a 2.3 percent rise in total logistics costs at current inventory levels, the report said.

“With the Federal Reserve choosing not to raise interest rates at its recent meeting, yet not ruling out an increase prior to year‐end, the potential for an uptick in consumer spending and a drawdown in inventory levels is uncertain.”

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