TEU Be Cass-T Down?
Following up on COTS: The Early Edition?
TEU - stands for Twenty-Foot Equivalent Unit which can be used to measure a ship's cargo carrying capacity. The dimensions of one TEU are equal to that of a standard 20′ shipping container. 20 feet long, 8 feet tall.
At The Port of Long Beach, aka Los Angeles... These are the two largest ports in the United States, handling approximately 6.8M TEU at Long Beach and 8.3M TEU at Los Angeles in 2015.
Long Beach YTD TEU % Delta: Inbound Loaded -7.8%; Outbound Loaded -11.7%; Total Loaded -6.0%. But that only tells a partial story,...
Above, YOY Monthly Delta % for loaded TEUS since January have fallen off the map, as in 95% negative meaning contraction.
Cass Freight Index - The Cass Freight Index is a measure of monthly freight activity, widely used by analysts and economists as an indicator of North American economic trends.
Below excerpts from the April 2019 report.... Economic Outlook from Freight’s Perspective - Negative Shipment Volume Hits Five Months in a Row
When the December 2018 Cass Shipments Index was negative for the first time in 24 months, we dismissed the decline as reflective of a tough comparison.
When January 2019 was also negative, we again made rationalizations.
Then February was down -2.1% and we said, “While we are still not ready to turn completely negative in our outlook, we do think it is prudent to become more alert to each additional incoming data point on freight flow volume, and are more cautious today than we have been since we began predicting the recovery of the U.S. industrial economy and the rebirth of the U.S. consumer economy in the third quarter of 2016.”
When March was down -1.0%, we warned that we were preparing to ‘change tack’ in our economic outlook.
With April down -3.2%, we see material and growing downside risk to the economic outlook.
Above YOY % Delta since January 2018, collapsing
WTI is at a price that proposes the world economy is stronger than airfreight volumes suggest, and that should stimulate more U.S. fracking activity in the coming months.
Consistent with disappointing housing starts (down -10.6% in February and -13.0% in March) and lackluster auto sales (down -4.5% in April and -2.2% YTD), spot pricing in transportation has declined dramatically.
Above, YOY Delta % Asia Pacific airfreight heading South since Jan 2017, and collapsing since August 2018.
Asian airfreight volumes were essentially flat from June to October 2018, but have since deteriorated at an accelerating pace (November -3.5%, December -6.1%, January – 5.4%, February -13.3%, March -3.3%).
If the overall volume wasn’t distressing enough, the volumes of the three largest airports (Hong Kong, Shanghai, and Incheon) are experiencing the highest rates of contraction. Even more alarming, the inbound volumes for Shanghai have plummeted.
This concerns us since it is the inbound shipment of high value/low density parts and pieces that are assembled into the high-value tech devices that are shipped to the rest of the world. Hence, in markets such as Shanghai, the inbound volumes predict the outbound volumes and the strength of the high-tech manufacturing economy.
Whether it is a result of contagion or trade disputes, there is growing evidence from freight flows that the economy is materially slowing.
There has never been an economic contraction without there first being a contraction in freight flows. Conversely, during the same period, there has never been an economic expansion without there first being an expansion in freight flows.
Bottom line: the volume of freight in multiple modes is materially slowing and suggests an increasingly bearish economic outlook for the U.S. domestic economy.
By popular demand... More to come in The 4th Proxy: One Step Beyond? and Consumer Spending Surge? Stay tuned, no flippin.
TEU - stands for Twenty-Foot Equivalent Unit which can be used to measure a ship's cargo carrying capacity. The dimensions of one TEU are equal to that of a standard 20′ shipping container. 20 feet long, 8 feet tall.
At The Port of Long Beach, aka Los Angeles... These are the two largest ports in the United States, handling approximately 6.8M TEU at Long Beach and 8.3M TEU at Los Angeles in 2015.
Long Beach YTD TEU % Delta: Inbound Loaded -7.8%; Outbound Loaded -11.7%; Total Loaded -6.0%. But that only tells a partial story,...
Above, YOY Monthly Delta % for loaded TEUS since January have fallen off the map, as in 95% negative meaning contraction.
Cass Freight Index - The Cass Freight Index is a measure of monthly freight activity, widely used by analysts and economists as an indicator of North American economic trends.
Below excerpts from the April 2019 report.... Economic Outlook from Freight’s Perspective - Negative Shipment Volume Hits Five Months in a Row
When the December 2018 Cass Shipments Index was negative for the first time in 24 months, we dismissed the decline as reflective of a tough comparison.
When January 2019 was also negative, we again made rationalizations.
Then February was down -2.1% and we said, “While we are still not ready to turn completely negative in our outlook, we do think it is prudent to become more alert to each additional incoming data point on freight flow volume, and are more cautious today than we have been since we began predicting the recovery of the U.S. industrial economy and the rebirth of the U.S. consumer economy in the third quarter of 2016.”
When March was down -1.0%, we warned that we were preparing to ‘change tack’ in our economic outlook.
With April down -3.2%, we see material and growing downside risk to the economic outlook.
WTI is at a price that proposes the world economy is stronger than airfreight volumes suggest, and that should stimulate more U.S. fracking activity in the coming months.
Consistent with disappointing housing starts (down -10.6% in February and -13.0% in March) and lackluster auto sales (down -4.5% in April and -2.2% YTD), spot pricing in transportation has declined dramatically.
Asian airfreight volumes were essentially flat from June to October 2018, but have since deteriorated at an accelerating pace (November -3.5%, December -6.1%, January – 5.4%, February -13.3%, March -3.3%).
If the overall volume wasn’t distressing enough, the volumes of the three largest airports (Hong Kong, Shanghai, and Incheon) are experiencing the highest rates of contraction. Even more alarming, the inbound volumes for Shanghai have plummeted.
This concerns us since it is the inbound shipment of high value/low density parts and pieces that are assembled into the high-value tech devices that are shipped to the rest of the world. Hence, in markets such as Shanghai, the inbound volumes predict the outbound volumes and the strength of the high-tech manufacturing economy.
Whether it is a result of contagion or trade disputes, there is growing evidence from freight flows that the economy is materially slowing.
There has never been an economic contraction without there first being a contraction in freight flows. Conversely, during the same period, there has never been an economic expansion without there first being an expansion in freight flows.
Bottom line: the volume of freight in multiple modes is materially slowing and suggests an increasingly bearish economic outlook for the U.S. domestic economy.
By popular demand... More to come in The 4th Proxy: One Step Beyond? and Consumer Spending Surge? Stay tuned, no flippin.
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