BLOOMINGTON, Ind. — FTR’s Shippers Conditions Index (SCI) continued to fall in October to a reading of -9.6. Truck rates, both spot and contract segments, have increased for shippers. This is an immediate reflection of the tight truck market, according to Eric Starks, FTR cairman and CEO, who added that after the holiday blitz, tight capacity should ease somewhat in first-quarter 2018, as it typically does, before peaking again in the spring.
However, there is additional downside risk to the SCI for early 2018 if contract rates jump substantially or the electronic logging device effects are more pronounced than expected.
The December issue of FTR’s Shippers Update, published in mid-December, details the factors affecting the October Shippers Conditions Index, along with discussion covering expectations for a healthy Class 8 equipment market in 2018.
“Conditions for trucking and shipping have been diverging dramatically since the hurricanes hit in August,” Starks said. “The hurricanes highlighted the lack of extra capacity available in the system. This has been followed by continued strong freight conditions in the third quarter and into the fourth quarter. Shippers are really feeling the pinch right now, and there is fear that the ELD mandate will impact capacity in the spring. We have essentially hit the 100 percent capacity mark — there is little, if any excess truck capacity.
“Add in regulations, continued freight growth, or winter storms and we could be pushing that above 100 percent. That would leave shippers scrambling to get loads delivered. And that means paying premium rates for those deliveries. It may be a tough first half of 2018 for shippers.”
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 shows 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 you 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.