U.S. Bank said it has issued a new freight index that measures both shipping costs and shipping volumes.
The U.S. Bank Freight Payment Index may be a competitor to the popular Cass Freight Index.
Rick Erickson, U.S. Bank freight payment solutions manager, explained that the index was created out of a desire to satisfy customers looking for additional insight.
They knew that the bank had shipping information available, Erickson said, and essentially asked: “What insight can you provide to us with this data you have?”
U.S. Bank makes payments up to $22 billion, a significant percentage of transportation spend, he said, adding that that figure includes other modes of transportation such as rail and shipping in addition to trucking.
One measurement, the U.S. Bank National Shipment Index, saw a robust gain in the second quarter of 2017 compared with the previous quarter. “The 5.8% gain justifies many economic forecasts for roughly 3% growth in second-quarter real gross domestic product,” U.S. Bank spokesman Bill Brady said, citing data from American Trucking Associations.
The Midwest saw the biggest shipment index gain at nearly 9%, whereas the Southeast was lowest at just under 4%.
“In terms of spend, the Midwest also led the pack at a 4.1% increase,” Erickson said. “The Western region actually declined in spend by almost 5%.”
The index value of 143.4 was up from 137.3 in the previous quarter. Business activity in the first quarter of 2010 was a base level of 100: It’s up 43.4% since then.
ATA chief economist Bob Costello, who provides analysis for the bank’s new index, said that the Midwest was strong because of manufacturing and a lack of drought. Like California, the area is significant agriculturally.
Costello believes the strong manufacturing sector in the Midwest makes the region prime for trucking, pointing out that the index is designed to highlight such regional data.
“This is the neat thing about this data; it is regional and that gives us a good snapshot into different regions. Unfortunately, not all other data is regional, so it’s hard to say exactly why this or that happened in this specific region,” Costello said.
Cass focuses nationally. Its data includes all domestic freight modes and is culled from more than $20 billion in freight transactions processed annually.
Erickson said U.S. Bank wanted to “go back to a certain point in time to build the index up” — so they went back to 2010, and are showing a complete trend line from the first quarter of 2010 through the present.
Another highlight of this debut report is finding that a glut in vehicle volume is becoming less of a concern. The report states that perhaps “the most important economic trend for the transportation industry, highlighting the strength in the second quarter, is the fact that inventories throughout the supply chain continued to decline, especially when excluding automobile stocks.”
Costello said that this is notable, but is not meant to suggest that there is no longer a glut at all.
“I’m not saying it’s not a drag anymore; it’s less of a drag, and it is moving in the right direction,” Costello said.
The index includes a national shipment index, which the report’s authors called a “robust increase” to 128.7, the highest since U.S. Bank started the series in 2010.
According to the report: “Even more impressive, this index is up a total of 9.3% through the first half of 2017 compared with the end of 2016.”