The Cass Freight Index for July, released on Thursday, shows that volumes of goods shipped in North America by truck, car and rail are returning to pre-pandemic levels, but shipping costs remain elevated.
Freight shipment volumes were only 0.5% higher than in July 2019, but 15.6% higher than in the same period last year. Deliveries were 3% lower than in June.
“The recent slowdown you see in July needs to be caught up as we approach the holiday season as the US consumer balance is very strong,” Tim Denoyer of ACT Research, who produced the report, told CNBC. “There is a high savings rate. There is a low inventory to sales ratio [for retailers]. That suggests a lot of cargo is ready to come in. “
Spending, a measure of shipping costs, was 22.7% higher than in July 2019 and 43% higher than in 2020. Still, the cost was almost 5% lower than in June.
“We are seeing the largest rate increases in general that we have ever seen. There is big rate inflation at this point because we have such supply-side constraints and really strong demand, ”said Denoyer.
Bernstein Transportation analyst J. David Vernon said the July report shows supply chains, and truck routes in particular, are still disrupted due to Covid-19.
“For food companies, retail companies that have a lot of trucks in their supply chain, it just means margins are coming under pressure,” Vernon told CNBC.
“Think of a box of cereal,” Vernon continued. “The transport costs for a box of corn flakes are actually pretty meaningful because not that much fits on a truck. If these prices go up, it has a pretty big impact on input costs in all industries. “
The full Cass Freight report will be released Thursday at 9:30 am ET.
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