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I Hear the Train a Comin'

Covid19 will take all of the blame, but freight indicators show a recession was on the way even without that massive economic disruption.

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Please consider the March 2020 Cass Freight Indexes.

The Cass Freight Index showed a weak U.S. freight market to end 2019 and to start 2020, and just as we were seeing signs of coming off the bottom, we get the coronavirus and all related smacks to an economy that was already struggling to gain traction.

This has quickly gone from a China production concern to a U.S. (and global) consumer spending problem. No business, no jobs, and no income for many leads to much less freight moving around.

US Rail Volume Comps - Cass March 2020

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Truckload linehaul rates - Cass March 2020

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This index turned lower in mid-2019.

Cass Truckload linehaul Index - March 2020

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Intermodal Volumes Cass - March 2020

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Cass Conclusion

All historical truckload and intermodal data was restated in November 2019, with an extremely high correlation to the previous data.

We hope the Cass Indexes bottom in April, and the quicker businesses can reopen, the better readings we should see in May and June.

Unrealistic Hope

There is no harm to hope, but expecting a quick, sustained recovery is another matter.

Ever since Cass outsourced production of this report to Stifel, the Csss report been one of rampant overoptimism.

The original writers (named Cass) were sounding recession signals whereas Stifel writer David G. Ross, spoke of signs of a freight bottom for the last few months.

We can never prove which view is correct, but seeing signs of a bottom in a recovery that was already the longest in history seems more than a bit questionable.

Realistically, we should now toss ideas of a bottom in April and face the fact the Covid-19 Recession Will Be Deeper Than the Great Financial Crisis.

Don't expect a V-shaped recovery.

Mike "Mish" Shedlock