US Bank Freight Payments Indexes Drop Amid COVID-19

Shipments and spending were down in the first quarter of 2020 compared to the fourth quarter of 2019, according to the U.S. Bancorp Freight Payment Indexes.

“Despite the strong movement of consumer staples during the second half of March, both the shipment and spend indexes contracted from Q4 2019,” the report said. “The shipments index increased 3.8 percent year-over-year in the first quarter but moved 1.8 percent lower compared to the fourth quarter of 2019.” 

The lockdown has created an increased demand for grocery items and other necessities, while “binge buying” led to shortages caused by supply chain issues. 

The U.S. Bank National Spend Index indicated a decline of 2.5 percent and further declined 3.7 percent compared to the fourth quarter. The report cites “lower volumes, falling freight rates and lower fuel prices” as the reasons.

The quarterly U.S. Bank Freight Payment Index analyzes the volume of freight shipments compared to the amount spent by companies shipping goods. Growth is up for the second quarter of 2019 but is comparatively a slowdown. Any gains are not enough to fully offset the declines in Q1 or from last year.

There are several reasons for the decline in shipping in 2019, such as the decline in factory output and less of a demand for exports. As the U.S. moves to import less Chinese goods, there could be more tariffs. 

“As we move into Q2, we’ll see places reopening, but we have no definition yet of impacts,” said Bobby Holland, U.S. Bank vice president and director of Freight Data Solutions. “Supply chains may be further stressed, or things may improve. We do know it will be challenging. The economy is expected to take a hit, and we’ll see the effects into the second quarter as supply chains continue to catch up.”

Factory shutdowns and stay-at-home orders have disrupted manufacturing and production, with ramifications reverberating throughout global supply chains. Meanwhile, a surge in online shopping as more people stay home has added extra pressure on supply chain, shipping and logistics firms.