BLOOMINGTON, Ind. — FTR’s Shippers Conditions Index (SCI) for March, as detailed in the May issue of the Shippers Update, has a reading of minus 1.7, putting it in marginally negative territory. Currently, softer freight conditions and a view of adequate capacity over the past 18 months have slowed the expected decline in this index, said Jonathan Starks, chief operating officer.
Any market-wide tightness reflected in recent tightening of spot rates is currently less than originally thought, but there are risks to shippers’ complacency in not being prepared for a crisis in capacity availability that still may happen as ELDs and other factors affect the market toward year end, he said.
The SCI is a compilation of factors affecting shippers’ transport environment.
Any reading below zero indicates a less-than-ideal environment for shippers.
Readings below minus 10 signal that conditions for shippers are approaching critical levels, based on available capacity and expected costs.
The May issue of FTR’s Shippers Update details the factors affecting the March Shippers Conditions Index, along with discussion of disconnects and risks to the most likely outcomes of factors affecting trucking.
“The trucking market still seems to be in a relative balance with enough available capacity to move goods at reasonable pricing,” Starks said. “However, that balance is slowly shifting toward the carriers. Spot market load activity is well above levels we saw last year, and spot pricing has recently hit double-digit increases. This pricing increase is partially due to increases in fuel pricing that occurred back in mid-2016, but it is also stemming from a modest reduction in capacity at the same time that load activity has increased. The potential for significant capacity tightness to occur by late 2017 is increasing as the freight environment is strengthening from a resurgence in manufacturing, construction, and industrial activity. Add in a potential capacity reduction because of the electronic logging device implementation in December, and the trucking market is poised for a significant change in 2018.”
The Shippers Conditions Index tracks the changes representing four major conditions in the U.S. full-load freight market.
These conditions are freight demand, freight rates, fleet capacity, and fuel prices. The individual metrics are combined into a single index that tracks the market conditions that influence the shippers’ freight transport environment.
A positive score represents good, optimistic conditions. A negative score represents bad, pessimistic conditions.
The index tells the industry’s health at a glance. In life, running a fever is an indication of a health problem. It may not tell you exactly what’s wrong, but it alerts you to look deeper. Similarly, a reading well below zero on the FTR Trucking Conditions Index warns of a problem … and readings high above zero spell opportunity. Readings near zero are consistent with a neutral operating environment. Double digit readings (both up or down) are warning signs for significant operating changes.
For more information about the work of FTR, visit www.FTRintel.com.