FTR Shippers Condition Index remains mostly unchanged

Business conditions impacting shippers remain largely unchanged, according to the most recent edition of the Shippers Condition Index (SCI) from freight transportation forecasting firm FTR Associates.

The SCI showed a 0.3 percent improvement to -5.3 in March (the month for which most recent data is available) from -5.6 in February.

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. The SCI in January, December, and November was -4.8, -4.8, and 6.1. May 2011’s -11.4 was the worst SCI reading of this current economic cycle.

FTR officials said that the current SCI reading is indicative of a moderately unfavorable condition that is expected to persist until the onset of the busy fall shipping season at which point capacity will tighten up even further. They added that by later this year and into 2013, the situation may get worse for shippers, as their options for available capacity become even more limited while rates increase when truck driver hours-of-service regulations are expected to go into effect by mid-2013.

“The forces that are in motion now are slow but very powerful,” said FTR Senior Consultant Larry Gross in an interview. “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.”

This was made clear at the recent NASSTRAC Logistics Conference and Expo, when various carriers 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.