Subscribe to our free, weekly email newsletter!


FTR Shippers Conditions Index points to tough stretch for shippers

By Jeff Berman, Group News Editor
January 23, 2014

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 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

Key sanctions are unlikely to be fully removed until Congress lifts the U.S. embargo on Cuba – something unlikely to take place before 2018 when incumbent president Raúl Castro is expected to step down

The PMI, the ISM’s index to measure growth inched up 0.7 percent to 53.5 over May’s 52.8. This reading marks sequential growth for the third month in a row, which was preceded by five months of sequential declines.

Foreign direct investment has never been more important in catalyzing growth, whether in the developed or developing world. Although equity markets around the world have largely recovered since the financial crisis, global capital flows have contracted sharply.

When it comes to the chances of the December 31, 2015 Positive Train Control (PTC) deadline being extended, something which railroads say is badly needed, it appears they need to be prepared to be disappointed. That was the chief takeaway of a statement from Sarah Feinberg, acting administrator of the United States Department of Transportation’s Federal Railroad Administration (FRA).

It’s said that innovation will lead the economy out of its current funk. But how does an organization become a perpetually innovative company? That’s one of the questions Kai Engel and his co-authors at A.T. Kearney set out to answer in their new book Masters Of Innovation.

Article Topics

News · FTR Associates · SCI · All topics

Comments

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


© Copyright 2015 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA