Domestic freight volumes and spending in January fell from December levels but were higher than year-earlier totals, with expenditures last month hitting their highest point for any January on record, according to a monthly index of shipping activity released yesterday.

The index, published by freight audit and payment firm Cass Information Systems Inc. said domestic shipment activity dropped by 4.7 percent month-over-month, while expenditures sequentially declined by 5.7 percent. Compared with January 2014, however, shipments rose 2.7 percent while spending increased 3.7 percent, according to the report, which is culled from a review of $26 billion in annual freight payables handled by Cass.

Besides last month's spending levels hitting a record for January, shipment growth represented the fastest yearly start for the index since 2012, Cass said.

2014: STRONG YEAR FOR FREIGHT
The strong start followed a period of more modest growth seen in the fourth quarter of 2014. After very strong gross domestic product (GDP) growth in the second and third quarter, the nation's economic output tapered off in the fourth quarter. Shipments followed suit, and spending declined as shipping activity slowed, according to Cass.

Throughout 2014, Rosalyn Wilson, a noted logistics analyst who provides the index's narrative, had forecasted that it would be the strongest year for freight since the start of the Great Recession in 2007. Despite the slowdown in the fourth quarter, that forecast panned out, Wilson said.

Freight costs also rose last year, as capacity tightened and the pricing pendulum swung in favor of the carriers after years when the market favored shippers. With supply and demand currently in balance—albeit precariously—rates should slowly rise in the near term, Wilson said. However, as freight demand picks up steam as the year progresses, rates across-the-board will rise at a faster clip, she said. Price increases will be amplified by a worsening capacity situation due to labor shortages, inadequate infrastructure, and a lack of available equipment to move the increased volumes, she said.

INTERMODAL'S SOLID GAINS
Separately, 2014 rail intermodal volumes rose 4.8 percent from 2013 levels, with the industry's three main components— domestic containers, domestic trailers, and international containers—all reporting year-over-year gains for the first time since 2011, the Intermodal Association of North America (IANA) said yesterday.

Domestic container volumes increased 5.7 percent, due in part to conversion of shipments from over-the-road trucking to intermodal. International volumes rose 4.4 percent, nearly doubling its growth pace of the past three years, IANA said. Trailer volumes, which have lagged in recent years as users phase out trailers in place of containers, posted a 2.9-percent year-over-year gain, IANA said.

The gains came despite terrible winter weather in the first quarter of 2014 that paralyzed large segments of the U.S. rail network, especially at the nation's rail hub in Chicago. The bad weather, combined with a shortage of locomotives and crews to handle increased demand across all commodity groups, created service reliability problems that the railroads are still struggling to surmount.