The most recent edition of the Shippers Conditions Index (SCI), which was released this week by freight transportation consultancy FTR, showed improvement, due in large part to what it called COVID-related influences.
FTR describes the SCI as an indicator that sums up all market influences that affect the transport environment for shippers, with a reading above zero being favorable and a reading below being unfavorable and a “less-than-ideal environment for shippers.”
For March, the most recent month for which data is available, the SCI came in at 19.7, which more than doubled February’s 7.93 reading and was ahead of January’s 3.73, which is the lowest SCI reading going back to October 2018.
FTR officials said that March’s reading represents the “most favorable market conditions ever,” but that came with the caveat that there are still operational challenges, as utilization rates and fuel costs turned highly favorable as a byproduct of COVID-related influences. The firm added that it projects highly favorable conditions for shippers will likely push the SCI significantly higher in the second quarter as plunging capacity utilization causes rates to fall and fuel costs continue to fall.
“We know that the SCI is going to surge in the second quarter as the pandemic drove freight levels down, thus, freeing up an unprecedented amount of trucking capacity,” said Eric Starks, Chairman and CEO at FTR, in a statement. “The real question is when will the turning point occur and start to move the SCI lower again. With recent freight data through the end of May showing an uptick in activity, the SCI should move in an inverse fashion and drive the index number lower in June. One thing we will be watching is a potential shortage of capacity available for shippers in the short-term as carrier's and drivers adjust to any sporadic upsurge in regional demand over the next several months. However, much will depend on the spread of the coronavirus and its impact on the broader economy.”