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
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...