News that the Cass Freight Index of North
American Freight Volumes moved downward another -5.3% in June adds
up in USA to a slow dance of negative cargo volumes seven months in a
The Cass Freight Index covers shipments
of merchandise for the consumer and industrial economy via all modes of
transportation, but it does not include bulk commodities, such as grains
Cargo Volume Means
Here is what CASS said this week:
“When the December 2018 Cass Shipments
Index was negative for the first time in 24 months, we dismissed the decline
as reflective of a tough comparison.
“When January 2019 was also negative,
we again made rationalizations.
“When February was -2.1%, we said,
“While we are still not ready to turn completely negative in our
outlook, we do think it is prudent to become more alert to each additional
incoming data point on freight flow volumes.”
March Continued Trend Downward
When March was -1.0%, Cass warned, “that
we are preparing to change tack in our outlook.
Then the April 2019 numbers came in at -3.2%.
“We see material and growing downside
risk to the economic outlook,” CASS said cautiously.
Now with the June 2019 -5.3% drop, hard
on the heels of a -6.0% drop in May, CASS signaled:
“The shipments index has gone from
warning of a potential slowdown to signaling an economic contraction.”
Negatives Don’t Always Impact
“We acknowledge that all of these
negative percentages are against extremely tough comparisons,” CASS
said, “and historically the index has gone negative without being
followed by a negative GDP.”
Entering Negative GDP
The Bureau of Economic Analysis (BEA) reported
second quarter numbers for USA gross domestic product (GDP) actually saw
overall growth in the USA economy slowing 2.1 percent, down from a 3.1
percent uptick during in the first quarter of 2019.
As compared to the same time last year,
GDP growth for the second quarter moved down to 2.3 percent, from 2.7
percent in quarter one of 2019.
BEA said that GDP figures for 2018, year-over-year
ended last year more than half a percentage point lower than previously
thought, while 2017 growth was revised (via tax cuts that year) upward.
On The Spot
“Weakness in spot market pricing for
many transportation services, especially trucking, is consistent with
the negative numbers and, along with airfreight and railroad volume data,
strengthens our concerns about the economy and the risk of ongoing trade
policy disputes,” CASS said.
Cargo According To IATA
The quarterly IATA Cargo Chartbook notes
traffic is advancing globally on fumes right now.
Asia lanes are down 12.6%, with North America
to Asia down 5.3%, Asia-Europe off 3.4% and Europe-North America falling
So while airlines cut capacity, IATA said
that new export orders suggest slightly positive growth in third quarter
IATA also notes its April Business Confidence
Survey of Airline Heads of Cargo indicated an uptick in optimism for improved
volumes and yields before yearend.
However for 2019, IATA FTK forecast is flat.
World According to AAPA
Meantime Association of Asia Pacific Airlines
(AAPA) said, that while air passenger demand continued to grow air cargo
markets weakened further with the fall in global new export orders.
AAPA airlines registered a 4.0% year-on-year
increase in the number of international passengers carried to an aggregate
total of 31.0 million for the month of June whilst revenue passenger kilos
(RPK), demand grew by 3.4% year-on-year.
Cargo A Downer
But the Malaysia-based organization reports
Asia Pacific air cargo markets continued to deteriorate, with lackluster
business sentiment feeding into lower demand for air shipments.
Pacific Cargo Tanks 7.2%
As a result, the region’s airlines
recorded a 7.2% year-on-year plunge in air cargo demand as measured in
freight ton kilos (FTK) in June, marking (where have we heard this before)
the eighth consecutive month of declining volumes.
“The average international freight
load factor fell significantly, by 5.1 percentage points to 58.8% for
the month, after accounting for a 1.0% increase in offered freight capacity,”
Herdman Weighs In
“Let me say this about that,”
. . . Andrew Herdman, AAPA Director General declared:
“The first half of the year saw the
number of international passengers carried by Asian airlines grow by an
encouraging 4.7%, “However, during the same period, Asian airlines
recorded a 6.2% decline in air cargo demand, reflecting prevailing weakness
in international trade flows across regions, as widening trade disputes
and higher tariffs continued to disrupt global supply chains.” Looking
ahead, Mr. Herdman said, more of the same with “air cargo demand
expected to remain weak.”
“Hoedown” is a
uniquely American word that describes a social gathering at which
lively folk let the good times roll with dancing.
Hoedown comes from the farmers of another century, back
during a time when the U.S. was mostly dotted with thousands of small
farms in between some big cities.
Work was long and hard, but every Saturday night you could
put the “Hoe,” an agricultural tool for turning the soil
Down, and put on your dancing boots.
So here is some summer dance music.
If that doesn’t work for you, how about a 1000-piece
jigsaw puzzle of American Painter Grant Woods’ iconic 20th century
painting “American Gothic” (Amazon
$16.30), to ease the way during the lazy, hazy, crazy days of
Let’s have a Hoedown, air cargo.
Beats a punch in the nose we say!