Subscribe to our free, weekly email newsletter!


Market conditions for shippers remain difficult, says FTR

By Jeff Berman, Group News Editor
February 28, 2014

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 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

ISI is comprised of Integrated Services, ISI Logistics and ISI Logistics South and is focused on the warehousing and transportation needs of automotive shippers. RRTS said that in 2013, Integrated Services generated revenues of approximately $21 million adding that Integrated Services is expected to be accretive to Roadrunner’s earnings in 2014.

The market for supply chain management software continues to expand, highlighting the importance of software in today’s supply chains.

Amid the talk and coverage about things negatively impacting the trucking industry like increasing regulations, tight capacity, and equipment-related issues and challenges, there is one thing to always remember about the sector: it moves a lot of freight, make that more than a lot, actually.

In an effort to increase territorial coverage, improve transit time, and augment service quality in Brazil, UPS recently announced it has made significant service expansions with the opening of nine new operating facilities in the state of São Paulo.

Article Topics

News · Truckload · FTR Associates · All topics

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