Subscribe to our free, weekly email newsletter!


FTR Shippers’ Condition Index suggests tough times are back

By Jeff Berman, Group News Editor
November 11, 2011

After things appeared to be looking up—in terms of business conditions—for shippers, data released this week by freight transportation forecasting firm FTR Associates indicates that tougher times are indeed back.

But while conditions have lessened in the past month, FTR noted in the most recent edition of its Shippers Condition Index (SCI) that the decline is a modest one, with overall conditions better than they were a year ago at this time.

FTR said the current SCI reading for September, the most recent month for which data is available, is -4.7, which is down 0.9 points from August. July, June, and May hit -3.8, -3.1, and -11.4, respectively, with May being 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.

Among the factors cited by FTR for the current environment were freight carriers maintaining tight discipline on capacity and pricing, coupled with slow economic growth. And various federal regulations such as the proposed Hours-of-Service changes also have the potential to exacerbate the situation going forward.

In an interview with LM, FTR Senior Consultant Larry Gross said that these findings are not surprising, given the confusion between what is exactly happening in the marketplace when rates are rising sequentially compared to how things were a year ago at the same time.

“Our sense if that with the very modest acceleration that has occurred in the economy the balance between capacity on the truckload side, which consumes the lion’s share of transportation dollars versus other modes and is tightly regulated by carriers, and a modest uptick in demand can be felt by shippers on the rate side,” said Gross.

And capacity control is both a function of the actions of carriers, as well as the inability of carriers that want to grow and locate drivers, he explained.

That is where the dark cloud regarding possible HOS changes comes into play, because it makes the future outlook for capacity more uncertain, explained Gross.

“Not only do we not know what is going to emerge from this political meat grinder [regarding HOS] that is in play, with the White House and FMCSA doing their thing, as well as pressure from the Republican side of Congress not to change anything,” said Gross. “The inevitability of it is whatever emerges when the HOS rule comes out later this month, it is certain to be challenged in court.”

And depending on what the rule is, it will be interesting to see if it includes a reduction in daily driving time from 11 to ten hours, plus the other proposed changes, which are likely to have a dramatic effect on supply chain productivity.

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).


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!

Recent Entries

Spot market freight volumes for the month of August remained elevated compared to seasonal norms, according to data issued this week Portland, Oregon-based freight marketplace platform and information provider DAT.

Factors such as rising freight rates, shrinking capacity, an increased desire for global supply chain visibility, have all worked together to drive the need for instituting a culture of continuous improvement in logistics operations and transportation management systems (TMS). To meet today's complex logistics challenges, managers are stepping into a more streamlined, automated approach to transportation management in order to function at optimal levels both domestically and internationally. Read the latest special report.

The Atlanta-based company said that it plans to hire between 90,000-to-95,000 seasonal employees, up from about 85,000 last year, to support “the anticipated holiday surge” for package deliveries commencing in October and running through January.

The Memphis-based company reported today that quarterly net income of $606 million was up 24 percent annually, and revenue, at $11.7 billion, was up 6 percent. Operating income at $987 million was up 24 percent.

The World Shipping Council (WSC) released an update to its survey and estimate of containers lost at sea.

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2013 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA