FTR Shippers Condition Index notes pending HOS changes could cut productivity

If things are improving for shippers lately, there is a chance that it will not be lasting, according to the most recent edition of the Shipper Conditions Index (SCI) from freight transportation consultancy FTR Associates.

By ·

If things are improving for shippers lately, there is a chance that it will not be lasting, according to the most recent edition of the Shipper Conditions Index (SCI) from freight transportation consultancy FTR Associates.

March’s SCI, which represents data for the most recent month available, was -7.3, marking an improvement from February’s -9.5. 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 trucking capacity and supply remain in “precarious balance…with very limited demand growth keeping shipping costs in check.” But the firm cautioned that shipping conditions are expected to deteriorate, due to seasonal freight gains and the pending July 1 Hours-of-Service (HOS) changes that are expected to limit driver productivity and cut available trucking capacity by 3 percent or more, according to industry estimates. 

“Current shipping conditions remain calm but storm clouds are on the horizon,” said Larry Gross, FTR Senior Consultant, in a statement. “Every indication is that the Hours of Service regulatory changes will occur as scheduled July 1, which FTR projects will reduce trucking productivity by about 3 percent.  While our estimate of the productivity hit is less severe than some, even a 3 percent decline will be sufficient to tip the balance of supply and demand significantly away from shippers, assuming the economy continues to maintain at least the anemic growth levels seen recently.  This will usher in an extended period of difficulty for shippers, as there is an array of new regulations lined up behind the HOS change that will further impact trucking in the months and even years to come.”

Gross recently told LM that back in 2004 there was a combination of a change in HOS and a growing economy, which resulted in about two years of freight increases.

“Now, this year, we have a raft of regulatory changes, plus a growing economy, with the new HOS rules as currently constructed likely to stand,” he said. “We are setting ourselves up for a 2004 replay, but the pressure on the driver supply and capacity is going to be considerably longer than the one-shot event that occurred in 2004. So we see the prospect for a negative rate environment extending much further.”


About the Author

Jeff Berman, Group News Editor
Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. Contact Jeff Berman

Subscribe to Logistics Management Magazine!

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your entire logistics operation.
Start your FREE subscription today!

Article Topics

FTR Associates · HOS · SCI · All Topics
Latest Whitepaper
How Lean is your Lean Quality Program?
Avoid quality program bureaucracy that can sap logistics productivity and increase costs
Download Today!
From the September 2016 Issue
Indecision revolving around three complex supply chain elements—transportation, technology and organizational structure—finds many companies waiting to commit to a strategic path. However, waiting too long will only result in a competitive disadvantage that will be difficult to overcome in today’s fast-paced, global economy.
Time for Asia’s ports to rebuild
Is the freight recession upon us…again?
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
Supply Chain Best Practices: Visibility to In-Transit Inventory
During this webcast you'll learn on how various organizations have gained instant access to in-transit parcels and given access to this information to stakeholders.
Register Today!
EDITORS' PICKS
25th Annual Masters of Logistics
Indecision revolving around three complex supply chain elements—transportation, technology and...
2016 Quest for Quality: Winners Take the Spotlight
Which carriers, third-party logistics providers and U.S. ports have crossed the service-excellence...

Regional ports concentrate on growth and connectivity
With the Panama Canal expansion complete, ocean cargo gateways in the Caribbean are investing to...
Digital Reality Check
Just how close are we to the ideal digital supply network? Not as close as we might like to think....