Continued softening in rates and lowering fuel prices contributed to FTR’s Shippers Condition Index (SCI) for November moving from negative territory to a positive reading of 0.1. This is the first positive reading for the index in more than two years and is the best since August of 2016.
FTR expects the SCI to stay within a range close to neutral throughout 2019, according to its analysts. However, the measure could move into even more positive territory if freight demand weakens further alongside strong truck buying and improved driver hiring pushing freight rates lower.
“Conditions have improved noticeably for shippers in the last few months," said Todd Tranausky, vice president of rail and intermodal at FTR. "The prospect of sustained lower fuel prices, increasing capacity in the truck and rail sectors, and the first signs of a turn in rail service raise the prospect of a much better 2019 than shippers expected during much of 2018.”
The January issue of FTR’s Shippers Update, published this January, details the factors affecting the November Shippers Conditions Index. Also included is a review of new orders to analyze the future durability of the manufacturing sector.
The Shippers Conditions Index tracks the changes representing four major conditions in the U.S. full-load freight market. These conditions are: freight demand, freight rates, fleet capacity, and fuel price. The individual metrics are combined into a single index that tracks the market conditions that influence the shippers’ freight transport environment. A positive score represents good, optimistic conditions. A negative score represents bad, pessimistic conditions.
The index tells you the industry’s health at a glance. In life, running a fever is an indication of a health problem. It may not tell you exactly what’s wrong, but it alerts you to look deeper. Similarly, a reading well below zero on the FTR Trucking Conditions Index warns you of a problem...and readings high above zero spell opportunity. Readings near zero are consistent with a neutral operating environment. Double-digit readings (both up or down) are warning signs for significant operating changes.