FTR Shippers Conditions Index points to tough stretch for shippers

The market environment for shippers was largely negative in November, even while improving for the third straight month, according to the most recent edition of the Shipper Conditions Index (SCI) from freight transportation consultancy FTR.

By ·

The market environment for shippers was largely negative in November, even while improving for the third straight month, according to the most recent edition of the Shipper Conditions Index (SCI) from freight transportation consultancy FTR

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 and a “less-than-ideal environment for shippers.”

The November SCI, which represents data for the most recent month available, was -6.0, which, while still in negative territory, showed growth for the third month in a row, following a low of 8.7 in August.

FTR said that the SCI will likely continue to moderate mildly as regulatory pressures are temporarily reduced because of freight multipliers due to a shift in the economic mix from industry to service, adding that anecdotal evidence indicates ongoing capacity tightness that stands as a negative for shippers.

“We are currently seeing things tighten up in the market, and it is not yet reflected in the November numbers,” said FTR President Eric Starks in a statement. “I would expect to see the SCI index weaken further as we move through the first quarter. This is not a good sign for shippers. The biggest concern right now is a tightening in trucking capacity. In early December, we saw a spike in capacity utilization and it was exacerbated by the recent storms. It will be interesting to see if the tightness continues as we start to approach February. If it does, then we will likely see a surge in shipping rates for all of 2014, as shippers typically put out bids and lock-in contract rates in the first quarter for the balance of the year.”

To what degree the anticipated rate surge would reach is unclear, but industry stakeholders have told LM that the market for carriers continues to gain traction, as evidenced by a strong spot market and the possibility that meaningful rate increases could stick.

A research note by Jason Seidl, transportation analyst for Cowen and Co. cited recent channel checks indicating an uptick in truckload demand and truckload rates improving, which, in turn, could lead to more shipper conversion from highway to rail to offset transportation expenses.


About the Author

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. Contact Jeff Berman

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 Associates · SCI · All Topics
Latest Whitepaper
SaaS Supply Chain Management Systems
A guide to better understanding the market, the software and the benefits
Download Today!
From the November 2016 Issue
The third time is the charm for this U.S. manufacturer on the hunt for a third-party logistics (3PL) provider that could successfully combine transportation services and technology capabilities under one roof.
Warehouse & DC Operations Survey: Ready to confront complexity
2016 Quest for Quality Awards Dinner
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
Digital Evolution: Streamlining Logistics and Supply Chain Operations
In this FREE virtual conference we'll define the challenges facing operations and offer solutions designed to create dynamic, automated networks that offer seamless communication, improved collaborative third-party relationships, and the ability to respond to changes at a moment's notice.
Register Today!
EDITORS' PICKS
Logistics Management’s Top Logistics News Stories 2016
From mergers and acquisitions to regulation changes, Logistics Management has compiled the most...
Making the TMS Decision: Ariens Finds Just the Right Fit
The third time is the charm for this U.S. manufacturer on the hunt for a third-party logistics (3PL)...

Motor Carrier Regulations Update: Caught in a Trap
The fed is hitting truckers with a barrage of costly regulations in an era of scant profits....
25th Annual Masters of Logistics
Indecision revolving around three complex supply chain elements—transportation, technology and...