Market conditions for shippers remain difficult, says FTR

Three months of mediocre growth regarding the market environment for shippers came to a halt in December, based on the most recent edition of the Shipper Conditions Index (SCI) from freight transportation consultancy FTR.

By ·

Three months of mediocre growth regarding the market environment for shippers came to a halt in December, based on 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.”

And the December SCI, which represents data for the most recent month available, was -6.9, down from -6.0 in November and still in negative territory. The most recent low point for the SCI is last August’s -8.7.

As has been widely reported by LM, difficult winter weather conditions continue to be an issue for shippers, when it comes to managing capacity and growth.

“After seeing decent economic growth to end 2013, 2014 has started off by taking a few blows,” Jonathan Starks, FTR’s Director of Transportation Analysis said in a statement. “First came the severe winter weather that put a significant cramp on both transport capacity and on production days for much of the U.S. This is likely to be a short-term impact as we get past the worst of the weather woes, but it does highlight the fact that there is very little excess capacity in the truck markets. We will know very shortly when the spring shipping season starts if it will be a bigger than expected issue. With only modest economic and freight growth expected to occur during most of the year, our best estimate is that we will be able to skirt any significant issues. However, if the economy (especially manufacturing) shows any sort of hot spell during the year, there is a real likelihood that capacity will be insufficient for many shippers and competition for truckers (aka pricing) will rise rapidly.”

Starks’ points have been resonating in the freight transportation market, with many brokers pointing to how shippers’ supply chains are several days, if not weeks, behind, due to the myriad storms in recent weeks and months.

This has led to shippers looking for more loads than usual at this time of year, with February traditionally viewed as slower than most months.

And the current situation, according to Avondale Partners analyst Donald Broughton, has led to a market far more favoring carriers than shippers.

“Our takeaway from recent trucking data points is that whatever the mixture of shrinking supply, bad weather, and solid demand, the sharp acceleration in the spot market in recent weeks and months shows how quickly the truckload marketplace has moved in favor of the carriers,” Broughton wrote in a research note. “We have recently raised our projections for TL pricing to greater than +3% for 2014 and would note that current spot market data suggests that rate increases of up to +5% could be possible if current trends persist.”


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 · Truckload · All Topics
Latest Whitepaper
Face security threats head-on. Protect data beyond perimeter.
Traditional Data Loss Protection (DLP) solutions present a number of serious shortcomings and challenges for companies deploying them, creating a clear gap in the market.
Download Today!
From the January 2018 Logistics Management Magazine Issue
Industry experts agree that costs across all sectors worldwide will continue to rise in 2018, and the most successful shippers will be those that are able to mitigate their impact on profitability. And, the right technology will play an increasingly vital role in driving efficiencies across the global logistics network.
The Future of Retail Distribution
Navigating the Reverse Supply Chain for Connected Devices
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
IAM, IoT and the Connected Supply Chain
There are three primary models of Identity and Access Management (IAM) technology that CTOs, CSOs, and Supply Chain executives are using to enhance their trading partner communities. While each leverages IAM and the IoT as core components only an “Outside-in” approach truly connects people, systems and things reliably and securely across the supply chain.
Register Today!
EDITORS' PICKS
State of Global Logistics: Delivering above and beyond
Industry experts agree that costs across all sectors worldwide will continue to rise in 2018, and...
2018 Rate Outlook: Economic Expansion, Pushing Rates Skyward
Trade and transport analysts see rates rising across all modes in accordance with continued...

Building the NextGen Supply Chain: Keeping pace with the digital economy
Peerless Media’s 2017 Virtual Summit shows how creating a data-rich ecosystem can eliminate...
2017 NASSTRAC Shipper of the Year: Mallinckrodt; Mastering and managing complexity
An inside look at how a large pharmaceutical firm transformed its vendor and supplier relationships...