Largest Shipping Decline Since 2009 and That's Before Coronavirus

Mish

The January Cass Freight Shipping Index is more bad news for the global economy.

The Cass Freight Shipping Index is down 9.4% year-over-year, the largest decline since 2009. And this is for January, before the Coronavirus disruption.

The turn of the calendar didn’t leave the bad news in 2019, as the Cass Freight Index showed continued weakness in the U.S. freight market. Both the shipments and expenditures components of the Cass Freight Index worsened sequentially and showed decelerating y/y growth. According to the broader stock market levels, there is still optimism out there, but the freight trends have yet to turn. And the Covid-19 coronavirus case count continues to grow, creating uncertainty around containment and eventual impact on global supply chains. Some Chinese factories resumed operation this past week, but they are still not close to 100% production levels. Others have pushed re-opening back to March 1.

Shipping Volumes

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Cass Freight Index

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Even before the coronavirus issues have any impact on the U.S. transportation market, the freight market is weak, partially due to elevated inventories.

Cass Air Freight Demand

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Cass Truckload Linehaul Index

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The Cass Truckload Linehaul Index, measuring per-mile linehaul rates, takes a look at the largest (and most fragmented) market in the domestic transportation landscape, and it showed a y/y decline of 6.3% in January (a big step-down from the -3.3% in December), as capacity loosened after a tight holiday shipping period.

Consumer Confidence

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On the plus side, going into 2020, the sentiment index for consumer confidence remains high. This is why the freight (and industrial) data has not translated into worse news for the broader economy yet. If this trend continues, it will provide support for the economy and likely guarantee the President a second term in office.

Consumer Confidence Silliness

That's more than a bit nonsensical.

If consumer confidence helped shipping, then the shipping index would not be the down 9.4% year-over-year, with a two-year change of -9.6%, and the worst decline since 2009.

Virus Probably With Us Beyond 2020

The above from Coronavirus Expert Opinions.

CDC director Dr. Robert Redfield says "I think this virus is probably with us beyond this season, beyond this year, and I think eventually the virus will find a foothold and we'll get community based transmission and you can start to think about it like seasonal flu. The only difference is we don't understand this virus."

Also note Harvard Professor Says Global Coronavirus Pandemic is Likely

Massive Shipping Disruptions Coming Up

The most important aspect of this report is that coronavirus implications are not yet reflected in the charts.

Note that Half the Population of China, 760 Million, Now Locked Down

Supply chain disruptions have barely started.

Mike "Mish" Shedlock

Comments (16)
No. 1-12
Tony Bennett
Tony Bennett

"According to the broader stock market levels, there is still optimism out there"

...

In the good old days (prior to non stop central bank intervention) equity markets would serve (at times) as nerve endings for the real economy.

ANYONE now equating equities as proxy for economy is a fool.

AWC
AWC

But, but, Tesla?

Greggg
Greggg

Consumer confidence - Polling the consumer base who are last people to know that anything has been changing.

TimeToTest
TimeToTest

I am glad the market didn’t get this information.

Can’t be letting it have a down day.

SMF
SMF

I'm an optimist because we have so much stuff that we don't really need to buy anything, which means more money in our pockets.

However, this doesn't help with overall consumption, does it?

Sechel
Sechel

shipping, oil, coppper all down

Six000mileyear
Six000mileyear

Such truth will be willfully ignored by the masses, and replaced by a false narrative the Coronavirus cause all the economic hardship.

stillCJ
stillCJ

Editor

Obviously Mr Market does not care about those fundamental facts. The only thing Mr Market seems to care about is how much the Fed is pumping into the economy (with fake money) as well as the PPT which also has access to fake money. Has it been a fake economy since 2008? How long can this continue before reality sets in? I am not going to short yet! "Don't bet against the Fed" - I learned that lesson.

mark0f0
mark0f0

Sounds like hyperdeflation will happen soon.

ksdude69
ksdude69

I'm a consumer. I'm confident we're screwed.

Maximus_Minimus
Maximus_Minimus

I detected a slight cynicism in these comments.

Hcor69
Hcor69

Chinese New Year was early this year, I suspect losing a week of shipping from China due to the lunar calendar is a large part of this drop. But as the author points out, it will get worse when Coronavirus impact hits.


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