Truckload linehaul rates rose 10.1% year over year in September, the 21st consecutive month of annual growth and the index's highest absolute reading in four years, according to data released Tuesday by Cass Information Systems (NASDAQ: CASS). The Cass TL linehaul index, which strips out fuel and accessorial charges and leans heavily toward contract rates, added 0.6% from August.

The sequential growth rate ran 30 basis points below the year-to-date average, a slowdown Cass attributed to softer spot rates and fewer contractual bids typical for this point in the calendar. On a two-year stacked comparison, the index sits 12.9% higher. The report's central message for shippers facing budget season was blunt: "Even as spot rates slow with modest sequential declines, the much larger contract market is still adjusting higher."

Are volumes finally following the rates?

Freight shipments recorded by Cass increased 1.9% year over year in September, only the second consecutive annual gain after 42 straight months of declines. Shipments rose 2.3% from August, or 1.4% on a seasonally adjusted basis.

Cass pointed to a demand picture that is mending rather than booming. "With modest retail and industrial growth, and some inventory restocking as container imports surge, freight demand is recovering," the report said. "The combination of a smaller private fleet and rising new equipment sales also supports higher for-hire volumes." The shipments index covers all domestic transportation modes, with truckload and LTL comprising the bulk of the dataset; recent months have seen road-to-rail conversion weigh on the trucking-centric measure as fuel prices climbed.

The manufacturing backdrop lends support. The Institute for Supply Management's Manufacturing PMI held above 50 for a ninth straight month in September, registering 54.5, with new orders at 55.3.

What is happening to shippers' freight bills?

Total freight spend is rising far faster than rates alone. Cass' expenditures index, which includes fuel, jumped 20.4% year over year and 6.7% sequentially. Three forces compounded in September:

• More shipments moving through the network
• Higher underlying freight rates
• Diesel prices up 68% year over year and 15% above August

Cass expects the expenditures index to climb 23% year over year in October, and forecasts the shipments index up 4% year over year in the same month, assuming normal seasonal patterns hold.

Why do carriers feel confident this bid season?

Truckload executives speaking at an investor conference last month said they enter the fall bid season from a position of strength. Management teams believe the capacity exodus is growing rather than slowing, and they expect the regulatory crackdown to remove thousands more non-compliant operators from the market. Those same executives brushed off the spot market's usual summer slowdown earlier in the year.

Tender rejection data tracked through SONAR points to a tight truckload market, with carriers turning away loads at levels consistent with constrained capacity rather than a typical seasonal lull.

Public carrier guidance corroborates the pricing trend. Werner Enterprises (NASDAQ: WERN) guided third-quarter rate per total mile at its one-way fleet up 10% to 13% year over year. The earnings test arrives Thursday, when J.B. Hunt Transport Services (NASDAQ: JBHT) reports results after the market close.

The Cass indexes draw on freight bills the company processes — $37 billion in freight payables annually — giving the dataset a direct read on money actually changing hands between shippers and carriers. September's print confirms that strict regulatory enforcement continues to squeeze non-compliant capacity, and with contract rates still adjusting upward, shippers should expect further cost pressure into October.