FTR Associates’ data points to flat business conditions for shippers

Fairly flat business conditions for shippers appear to be the new normal in a way. That appears to be the general consensus of freight transportation consultancy FTR Associates monthly Shippers Conditions Index (SCI).

The SCI for April, the most recent month for which data is available, was -5.4, down slightly from March’s -5.3. A reading above 0 suggests a favorable shipping environment, and FTR describes the SCI as an indicator that sums up all market influences that affect shippers, with a reading above zero being favorable and a reading below zero being unfavorable. May 2011’s -11.4 was the worst SCI reading of this current economic cycle.

FTR officials said that the SCI is expected to remain in a tight range throughout the summer, potentially deteriorating marginally in the latter part of the year, with the real negative impact to shippers will beginning in 2013 as new Hours of Service rules are expected to further reduce already tight trucking capacity.

“The current lackluster performance of the economy has had a silver lining for shippers as slow growth in truck freight demand has not caused capacity to tighten to a great extent, keeping a lid on rates,” said FTR Senior Consultant Larry Gross in a statement. “The moment of truth has been delayed but not avoided.  We still expect shipping conditions to deteriorate as we move into 2013 unless external events such as the European debt crisis send the economy back into a tailspin – an event that is possible but not considered likely as of this point.”

In a recent interview with LM, Gross explained that the forces that are in motion now are slow but very powerful, adding that unless the economy turns solid in a big way, things are going to get tougher for shippers, especially as new regulations take hold.

“From a shippers’ standpoint, rates will go up, and capacity will get harder to find,” he said.

Various carriers have told LM that rate hikes, especially on the trucking side, will be coming to help off-set their increased expenses being brought on my steep equipment costs, labor, and regulations, among other factors.