Lower Fuel Costs Fail To Boost Shipping Activity

Cass’ monthly freight index report showed shipping expenditures falling to 1.4 percent from a year earlier, while volume in the same period was down 0.2 percent, extending declines to a fourth month.

The Wall Street Journal
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Spending by U.S. shippers fell to a two-year low in January, reflecting plunging fuel costs and a sluggish freight market, according to a survey by Cass Information Systems Inc., The Wall Street Journal reported.

Cass’ monthly freight index report showed shipping expenditures falling to 1.4 percent from a year earlier, while volume in the same period was down 0.2 percent, extending declines to a fourth month.

The freight market is typically slower in January. But the numbers illustrate how shippers continue to hold back on spending because of elevated inventory levels, even as lower fuel prices make it cheaper to move goods.

Trucking companies have reported lower profits and many have seen their share prices plunge as shippers have cut back. However, executives with two large carriers said they were anticipating a rebound.

It “feels like there’s still a bit of inventory burn going on,” with retailers holding back on replenishment after overstocking last year, Derek Leathers, president and chief operating officer of Werner Enterprises Inc., said at the BB&T Transportation Services conference this week. But declining gasoline prices eventually will stimulate the retail market, he said.

Freight demand isn’t “robust right now, but certainly it’s not nearly as dismal as some of the commentary,” Mr. Leathers said.

Richard Stocking, president and chief operating officer of Swift Transportation Co. said at the same conference that consumer spending will be central to economic growth and shipping demand in coming months.

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