S&P 500 Near All – Time High’s, but why is freight starting to look like 2008. | Alpha Street

S&P 500 Near All – Time High’s, but why is freight starting to look like 2008.

July 02, 2019

2019 Mid-Year – Freight Update

S&P 500 Near All – Time High’s, but why is freight starting to look like 2008.

One of my favorite sectors to watch is Freight Transportation a sector I started my career watching as an analyst on Wall Street. Moving goods & service is the pulse of any economy, especially a Globalized economy. If you sell goods (name your widget) it is likely manufactured in another country. Then its shipped back to the U.S by Air/Ocean and it goes into the US Transportation network.

What is LTL? Less than truckload shipping or less than load (LTL) is the transportation of relatively small freight. The alternatives to LTL carriers are parcel carriers or full truckload carriers. Parcel carriers usually handle small packages and freight that can be broken down into units less than 150 pounds (68 kg). ~Wikipedia

LTL is one of my favorite indicators on the economy – It has been down for each of the public LTL carriers on a monthly basis since October 2018.

What is the Cass Shipment Index?

Cass Freight Index is a measurement of the monthly aggregate deliveries of U.S. freight. Cass Information Systems, a provider of automated payment systems, compiles the index. The company claims to be the nation’s largest payer of freight bills, on behalf of its shipping clients. ~WikiPedia

Cass Shipments have seen the biggest year on year decline since 2009.

 

What is IANA? Intermodal Association of North America

What is Intermodal? Intermodal freight involves a container (usually ocean) which is put onto a rail line and is than collected by a truck for final delivery to a distribution center. Been one of the fastest growing areas in shipping.

IANA Rail Intermodal volumes have seen the biggest declines since 2001.

What does this all mean? Stock Market aside, the pulse of the economy is showing duress. If shipments are declining at a rapid pace, the growth of the economy is going to slow or go negative. The definition of a recession is 2 Quarters of negative growth.

Investors need to pay attention to what the economy is saying, not the stock market.

Business owners, now is not the time to be making major investment decisions, now is the time to be shoring up capital for tougher times.