FTR Shippers Condition Index remains cautiously positive for first half of 2016

The most recent edition of the Shippers Condition Index (SCI) from freight transportation consultancy FTR issued this week points to mild market conditions. FTR describes the SCI as an indicator that sums up all market influences that affect the transport environment for shippers, with a reading above zero being favorable and a reading below zero being unfavorable and a “less-than-ideal environment for shippers.”

By ·

The most recent edition of the Shippers Condition Index (SCI) from freight transportation consultancy FTR issued this week points to mild market conditions.

FTR describes the SCI as an indicator that sums up all market influences that affect the transport environment for shippers, with a reading above zero being favorable and a reading below zero being unfavorable and a “less-than-ideal environment for shippers.”

For November, the most recent month for which data is available, the SCI was -0.6, which was an improvement over October’s -3.1, and in line with September’s -0.5.

Going forward, FTR said it expects the SCI to head into a moderately negative range later this year, spurred on by the expectations for tight capacity for 2017 to kick in. And it explained that shipping costs are currently seeing a positive impact from low fuel costs that are basically offsetting increases in transport costs, coupled with the expectation that will remain the case until the second half of 2016, with the SCI expected to drop as a result of the pending capacity crunch.

“The tough conditions that shippers had been operating in since the end of the recession have been muted over the last year,” said Jonathan Starks, Chief Operating Officer at FTR, in a statement. “Over the last twelve months the SCI has averaged a reading of just -1, a sharp contrast to the -6 that it averaged for the 3 years prior. These more benign conditions have come about because of 2 key factors: fuel prices have yet to find a bottom, and truck and rail capacity is ample enough to handle any surges in freight. With oil prices continuing to fall to decade lows to start 2016, it looks like we could even see some positive readings during the first quarter of the year.”

And he added that the market will remain relatively neutral during 2016 and most of 2017 before shifting negatively for shippers in the latter part of 2017 as several key regulations (such as mandated usage of electronic logging devices) start having an impact on the market. Forward-looking shippers, he said, will be keeping a close eye on those dates in order to advantage of the current environment to nail down capacity and lock in rates.

While the economic landscape is muddled with conflicting pros and cons like low gas prices and loose capacity as part of the former and sluggish industrial output and cautious consumers as part of the latter, ongoing uncertainty is having an impact on shippers’ supply chain operations from various perspectives, including strategy, planning, and procurement.

This, in turn, has seen shippers try to lock in more contractual pricing instead of spot pricing, with carriers able to leverage that into future capacity commitments.

Industry stakeholders have told LM 2016 could prove to be an interesting one for shippers, depending on economic growth levels and expected significant impact of industry regulations like electronic logging devices, and the possible resumption of motor carriers hours of service rules, among others.


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 · SCI · All Topics
Latest Whitepaper
B2B Sellers Prefer a Unified Approach for Ecommerce
A new study from Forrester Consulting, commissioned by NetSuite, found that many midmarket, B2B sellers say their ecommerce solutions have contributed to their growth in sales, new customer acquisitions and improved customer relationships.
Download Today!
From the August 2016 Issue
A growing number of low-cost lift trucks offer new avenues for pairing equipment and applications, but less cautious buyers might find that small up-front costs come at a steep price. Selecting the proper lift truck, lift truck tips 2016, Choosing the right Lift Truck
Megatrends in ocean freight
Ocean Cargo Roundtable: What’s in store for 2017?
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
Getting the most out of your 3PL relationship
Join Evan Armstrong, president of Armstrong & Associates, as he explains how creating a balanced portfolio of "Top 50" global and domestic partners can maximize efficiency and mitigate risk.
Register Today!
EDITORS' PICKS
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....
Top 25 ports: West Coast continues to dominate
The Panama Canal expansion is set for late June and may soon be attracting more inbound vessel calls...