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Cass predicts economic contraction after eighth consecutive month of shipping declines

The July Cass Information Systems Inc. Freight Shipments Index sounded dire warnings for an economic contraction following the eighth consecutive month of negative year-over-year numbers.

The shipments index has gone from ‘warning of a potential slowdown’ to ‘signaling an economic contraction,

Cass said in its July report, released on Thursday, August 15.

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The index dropped 5.9 percent in July following a 5.3 percent drop in June and a 6.0 percent decline in May.

We see a growing risk that gross domestic product (GDP) will go negative by year’s end,

the Cass report said. The index has turned negative in the past without being followed by a negative GDP. However, weakness in demand is now being seen across many modes of transportation, both domestically and internationally.

Weakness in spot market pricing for air cargo, rail and especially trucking “is consistent with the negative Cass Shipments Index and strengthens our concerns about the economy and the risk of ongoing trade policy disputes,” Cass said.

The dramatic decline in spot trucking rates is partially explained by private fleets “clawing back” loads from for-hire companies that raised spot rates 25 percent and contract rates 15 percent in early 2018. So, even though freight is growing slightly, fewer loads are available on the spot market, according to Kenny Vieth, president of ACT Research.

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