Decline in Shipping Volumes Could Trigger Freight Recession

Freight rates rose another 2.9 percent in April, according to the latest Cass Freight Index report, as the cost of global logistics continues to rise.

Year-over-year, rates were up 31.3 percent compared to April 2021. While still a significant jump, that was a slightly smaller increase than the 32 percent year-over-year rise in March. However, Cass notes there is reason to be optimistic that rate increases will decelerate in the coming months. Spot rates, which are short-term pricing that reflect the real-time supply and demand for freight, have fallen, indicating that the rest of the market could follow. Further, driver availability has improved while freight demand has slowed. “This is a deflationary combination, though it will take several months to filter the spot market into contract rates,” Cass Information Systems said.

As a result, the information company now expects overall freight increases for 2022 to be lower than the 23 percent seen in 2021.

The shipments component of the index fell 0.5 percent year-over-year in April, down from a 0.6 increase in March. The trend was even more noticeable on a month-to-month basis, falling 2.6 percent. Cass explained that this month-to-month decrease was 0.9 percent below the normal seasonal pattern, and that the possibility of a freight recession is now “considerable” as inflation slows spending.