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FTR Shippers’ Condition Index points to future declines

By Jeff Berman, Group News Editor
September 27, 2011

As many factors related to the economy remain highly uncertain, data released by freight transportation forecasting firm FTR Associates indicates that business conditions for shippers are better than they were earlier in the year but are again showing signs of slipping.

In FTR’s most recent edition of its Shippers’ Condition Index (SCI), the firm noted that after a “brief term of improving conditions for shippers, [the SCI] has begun to fall as expected. The deterioration reflects the current trucking situation in which demand has completely utilized the available fleet capacity leaving little room for even modest seasonal increases in activity.

The SCI is based on “all market influences that affect shippers,” with a reading of zero reflecting a solid environment and anything below zero reflecting an unfavorable environment.

FTR said the current SCI reading for July, the most recent month for which data is available, is -3.8, which is down from -3.1 in June. This is better than May’s -11.4, which marked the worst SCI reading of this current economic cycle.

“There are a number of issues in play at the moment,” said FTR Senior Consultant Larry Gross in an interview. “One is a ‘pipeline’ issue and that is the ability of carriers to process drivers and qualify and train them. We think there are issues here…with carriers not dramatically beefing up their recruiting capabilities, which is a fixed cost and expensive and basic problems of supply.”

Another issue impacting this situation is the regulations taking place which Gross said are restricting productivity of the driver fleet at a time when more drivers are needed.

And with the number of sideways-like seasonally-adjusted economic indicators used to gauge the economy, Gross said that while capacity is tight volume are increasing seasonally. Even if a seasonally-adjusted index is showing a flat performance, it still means more drivers are needed in a current month than the previous month, said Gross, because the seasonal peak is approaching. He added that while these indices are seasonally-adjusted the driver supply is not.

How this year’s Peak Season plays out is yet to be determined, as this year there is not the high level of inventory rebuilding by shippers, as was the case a year ago, which led to increased and earlier Peak Season activity.

About the Author

Jeff Berman headshot
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. .(JavaScript must be enabled to view this email address).


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