February Freight Shipments Up 8.3% From January
According to a new report published by Cass Information Systems headed by Roslyn Wilson, the number of freight shipments in North America for the month of February 2016 showed an 8.3% increase.
Talking about the changing trend in the global market, Wilson believed that, “The robust turnaround this month signals improvement, but current economic conditions do not support a robust rebound.” She further stated that the, “Global markets are still weak — especially with China’s economic turmoil — which is reducing demand. The U.S. dollar remains strong, making our export goods more expensive on world markets; consumers are in a stronger position with positive income growth, but still remain conservative in their spending and more growth has been seen in the purchase of services rather than goods. Inventories remain very high in the goods sector, which has reduced imports and domestic manufacturing.”
In contrast to February 2015, February 2016 showed a 2.6 % decline, but it was 5.2% better than that in January 2016. An increase of 1.1% in railroad car loadings was also seen and an increase in the motor vehicle demand for its components and parts also rose.
When talking about the truckload tonnage, Wilson made the followed statements. “Surprisingly, truckload tonnage was at an all-time high in November and December 2015 — according to the American Trucking Associations — and fell only 1.4 percent in January. The volatility in the energy markets, as well as fragile economic conditions worldwide, has introduced a strong element of uncertainty into future freight growth in the U.S,” she said.
February was marked as the 5th successive month in which the US economic activities thinned as reported by the Institute for Supply Management (ISM). Even after a boost of 2.7% in its growth the overall index for February remained well under 50%, which was not a good start to the month.
As for the good news, the economy is not coming to a sudden halt as reported by the Purchasing Manager’s Index (PMI) sub-indexes by ISM. For example, the accumulation of orders increased by a 12.8% and the index for production jumped with a 5.2 % increase.
After a revised fall of 7.3 % in January 2016, the freight payments climbed to a 6% increase In February. The report suggests that this new trend is here to stay and promises to be more in line for the better.
Wilson also reported that, “There are abundant opportunities for the economy to stumble in 2016, but underlying economic indicators are pointing to a sluggish first half of 2016,” Wilson said. “The goods sector is fast approaching the need to rationalize bloated inventories as it did midway through the recession. Interest rates and warehousing costs are on the rise, increasing the cost of carrying that inventory.”
Lastly, another indicator that previous year was taken into account when talking about freight shipments was carrying costs, but since they have been so low after the recession, they can no longer be counted as a major threat to the economy. However, if the Federal Reserve talks about raising the interest rates again, that may raise some red flags. The report also concluded that the reason exports aren’t stating a flourishing stat is due to the low international demand for US made goods and also the availability of substitutes and cheaper goods in other foreign markets. The market may swindle if the interest rates are increased, but as for now, the trend promises continuous growth for the trucking industry in the coming few months. – See more at: http://truckernews.com/february-freight-shipments-up-from-january-p760-90.htm#sthash.mYRzP5cn.dpuf