via Tom McClellan
The folks at Cass Information Systems spend their time gathering a lot of data about how much money gets spent on shipping things, and their data show that the U.S. is already in a recession of economic activity. This week’s chart features a fun comparison I put together, comparing the Cass Truckload Linehaul Index to data from the Bureau of Labor Statistics on total U.S. manufacturing employment.
From Cass’ website: “Cass Truckload Linehaul Index is a measure of market fluctuations in per-mile truckload linehaul rates, independent of additional cost components such as fuel and accessorials.” It peaked at 168.6 back in May 2022. That was when container ships were parked off of Long Beach, CA because they could not unload fast enough, in part because of a lack of trucks. Americans were buying stuff like crazy, spending a lot of Covid-money that Congress was throwing at the problem, abetted by the Fed cutting interest rates to nothing.
Now that index is down to 136.7, and has recently started dropping faster again after leveling off earlier in 2024. That drop makes things tough for truckers who bought their own rigs back in 2022, and now are struggling to get enough work to make the payments on them.
This drop in shipping rates has not yet flowed through to manufacturing jobs, although those data are curling over and are now at the lowest level since Sep. 2022. The history of the Cass Truckload Linehaul Index data only goes back to 2005, so we cannot see how it would have behaved farther back. But we can see from this limited data that it is not a good sign for manufacturing jobs to have trucking rates falling.
Cass also publishes separate indices on total shipments and on expenditures. Both have been showing negative year over year (YoY) rates of change since February 2023.
Those rates of change have become less negative than what they showed at their extreme lows in late 2023, but they are still showing shrinkage versus a year ago. That is another way of saying that this has not been a good time to be in the trucking or shipping businesses. We still have rising rates of GDP in the U.S. right now, as of the latest reported data. But every other time that the Cass Expenditures Index rate of change has gone negative has brought falling GDP at some point as part of that episode. So it would be exceedingly unusual for the U.S. to escape a generalized economic recession this time, with trucking already in one.
Tom McClellan
Editor, The McClellan Market Report