With the start of the new year, the commercial trucking and freight industry faces many obstacles. The trucker deficit continues to increase, and the high tariffs against China are projected to have great implications on exports in many parts of the U.S. However, despite growing concerns and harsh year-over-year comparisons, the Cass Freight Index report for January 2019 remains promising. Here is what you need to know about the Cass Freight Index report’s outlook for trucking in 2019.
What is the Cass Freight Index Report?
The Cass Freight Index report is a monthly publication released by Cass Information Systems. Since 1995, this report has been a highly trusted source of insight into the trucking industry and how it correlates with the wider economy.
The Cass Freight Index is often referenced by news sources and industry professionals. This report is also considered by many logistics executives and analysts to be the “most accurate barometer of freight volumes and market conditions.”
January’s Cass Freight Report Insights
When examining December and January’s data, the untrained eye may see a negative report. From January 2018, this year’s January report is down 0.3 percent. Additionally, January is down 1.2 percent compared to December 2018. Annually, December was also down by 0.8 percent.
January and December were the first two months in the last two years to reap negative numbers. However, the author of the Cass Freight Report, Donald Broughton, states that this is not a cause for concern. Because December 2017 and January 2018 were all time highs for shipment growth, a slight decrease this year simply means that freight flows are stabilizing.
Shipments May Continue to Lower
The author of January’s report also states that shipments may continue to show negative results through the coming months. Broughton explains that this may be the case due to the following factors:
- Increasingly difficult annual comparisons
- Transportation infrastructure at or near full capacity
- Low employment making it difficult to grow the active workforce
The Trucking Industry in 2019
Despite the negative numbers, Broughton ensures there is no need for alarm. In fact, the trucking industry is holding more promise in 2019 than previously expected. The report states that before January, many analysts and industry experts believed there was no way for 2019 to surpass the exponential growth seen in 2018. However, the outlook on 2019 has now changed. While many still don’t believe we will see comparative numbers to 2018 throughout the year, the report anticipates growth at an above-average pace will be seen.
Possible Storm Clouds
The report remains optimistic for 2019 growth. However, it also states that there are two “storm clouds” on the horizon that should not be ignored. When considering the freight industry in 2019, these two international issues should be considered:
Higher tariff threats with China
At the beginning of January, the U.S. had raised tariffs against China by 10 percent. Now, there is a threat of raising these tariffs to 25 percent in the coming months. China is the world’s second largest economy, and the increased tariffs could have real implications on the U.S.A.’s agriculture exports, along with other raw materials. If even higher tariffs are put in place, the freight industry could see a real decrease in volume.
The Decline of WTI Crude
In December, WTI Crude oil reached a low of $42.50 per barrel. This caused the oil to become less profitable, which in turn led to less incentive to drill for this oil. However, at the time of the report, WTI Crude was back up to $51 per barrel, which has led to some optimism on this front. However, there is still uncertainty about the future of crude fracking throughout 2019.