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FTR Shippers’ Condition Index points to tight capacity and firm rates remaining intact

By Jeff Berman, Group News Editor
January 11, 2012

Business conditions for shippers appear to be on a fairly typical seasonal pattern, according to the most recent edition of the Shippers Condition Index (SCI) from freight transportation forecasting firm FTR Associates.

In November, the most recent month for which data is available, the SCI decreased 2.5 months from October’s -3.6 to -6.1. May’s -11.4 was the worst SCI reading of this current economic cycle. 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.

FTR explained that the trucking industry is in “a stable phase with firm rates and modestly tight capacity,” which is expected to be the case throughout 2012. The firm also observed that the prevailing theme of a significant capacity shortage in 2012 due to the final Hours-of-Service (HOS) ruling issued in late December may not take hold until 2013 as the rule is not expected to take effect until the middle of next year.

What’s more, the firm explained that any possible HOS-related capacity shortage may not be as severe as originally expected, because the ruling was not as stringent as it could have been, with the 11-hour daily driving period remaining in place.

But Larry Gross, FTR senior consultant, noted in a statement that the enforcement date of mid-2013 provides plenty of time for the inevitable court challenges to proceed without imposing additional uncertainty costs on shippers and carriers.  And he added that unless there are further changes in this or other new regulations, or a major economic slowdown between now and the middle of next year, FTR still projects a major capacity shortage in trucking for next summer.

In an interview with LM, Gross said that November’s SCI reflects a “more of the same” type of theme in that tight capacity and firm rates are expected to remain intact. Another hindrance to adding capacity, said Gross, is an ongoing challenge for carriers to find available drivers.

“With HOS, it is much less likely in this extended timeframe and the more moderate posture of the final rule that there will be some sort of court delay in this timetable [should safety groups or trucking groups challenge the FMCSA’s HOS ruling in court],” he said. “The question is whether the Feds have successfully threaded the needle and put out a rule that sufficiently displeases each party to the extent that it can get through the court. But a court may say ‘these guys listened and made an attempt to put good science behind it’ and that the rule is imperfect but not imperfect enough to the point where it should intervene. It is very likely that could be the end result and may be the end of this [HOS] saga.”

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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Article Topics

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