High fuel chipping away at shippers’ market

FTR's shippers index is yet another barometer of how summer price surges for diesel and gasoline are creating uncertainty in trucking’s 2023-24 struggle to reverse the demand lull and avoid recession like the larger U.S. economy.

Scott Achelpohl

Aug. 31, 2023

3 min read

Newly released readings from the monthly Shippers Conditions Index by FTR Transportation Intelligence provide further evidence that market conditions for freight hauling are precarious, thanks largely to fuel-price increases in July and this month headed toward last summer's records.

The U.S. average for diesel fuel rose significantly again—8.6 cents to $4.475—bringing the total surge for trucking's main fuel since July 24 to almost 67 cents per gallon, according to Aug. 28 data from the U.S. Energy Information Administration (EIA). The national gasoline average was down 5.5 cents to $3.813 per gallon the week of Aug. 28, but that consumer and small-fleet fuel also has risen sharply in recent weeks and sits pennies below the highs of 2022.

The fuel spikes appear on FTR's SCI, according to an Aug. 29 release from the industry data aggregators. The SCI fell in June to a 7.9 reading from May's 8.6 and "was impacted negatively by the recent jump in diesel prices," according to the FTR release.

"Fuel is one of the most volatile components that can impact shipper conditions through its ability to move fuel surcharges and capacity around. It weakened overall shipper conditions in the latest month, but the SCI remained at a fairly positive level overall," said Todd Tranausky, VP of rail and intermodal. "If fuel prices continue to increase, it will push less positive readings in the SCI in the months ahead."

The SCI tracks changes in four primary conditions in the U.S. full-load freight market: freight demand, freight rates, fleet capacity, and fuel prices. The metrics are combined into a single index that tracks the market conditions that influence the environment for shippers. A positive score represents good, optimistic conditions; a negative one represents bad, pessimistic conditions.

The latest readings from June are contained in the August issue of FTR's Shippers Update, which also provides an initial assessment of what the demise of Yellow Corp. could mean for less-than-truckload rates and forecasts the SCI through June 2024. It predicts that if fuel prices continue to rise, the index will keep dropping, and market conditions will continue to erode. EIA's single-week record for per-gallon diesel was set at $5.81 during the week of June 20, 2022, so the U.S. average has some distance to travel before entering that territory again. But the fuel spikes have made industry observers anxious.

FTR's Trucking Conditions Index (TCI) is also trending down, and with the Aug. 23 release of its TCI, Avery Vise, FTR's VP of trucking, pointed at elevating fuel prices as well. "The challenges are not uniform as the current market is hitting small carriers much harder than larger ones, especially considering the recent upturn in diesel prices," Vise added.

Ken Adamo, chief of analytics at another trucking data researcher, DAT Freight & Analytics, also said: "The sudden increase in fuel prices is testing the wherewithal of small carriers at a time when freight volumes are in a seasonal lull."

About the Author

Scott Achelpohl

Managing Editor

Scott Achelpohl is a former FleetOwner managing editor who wrote for the publication from 2021 to 2023. Since 2023, he has served as managing editor of Endeavor Business Media's Smart Industry, a FleetOwner affiliate.