FTR: Lower fuel prices boosted December's SCI reading

Research and forecasting firm FTR Transportation Intelligence said lower fuel prices and the impacts associated with the suspension of the 34-hour restart provision within current hours-of-service (HOS) rules helped improve its Shippers Conditions Index (SCI) for December.

The SCI moved to a near-neutral reading of negative 0.6, though FTR said it expects the conditions for shippers to deteriorate in 2015 due to pressure from “regulatory drag” as rising freight volumes collide with tight trucking capacity.

“For those who are focused on the bottom line, the recent news has been very favorable. For those looking down the road, there are still plenty of obstacles to prepare for,” noted Jonathan Starks, FTR’s director of transportation analysis, in a statement.

Declining fuel costs in December and into January benefitted both carriers and shippers, he added, but that may not last.

“As diesel prices continue to stabilize, as they have over the last few weeks, those financial tailwinds will quickly abate,” Starks stressed.

Still, after seeing total transport costs rise 2% to 3% throughout 2014, FTR expects those costs will actually be below year ago levels during the first quarter of 2015, with that trend continuing for most of the year.

“The flipside is that fleets are still pushing for strong base rate increases as their costs outside of fuel continue to be higher,” Starks noted. “Successful shippers will be focused on total landed cost, base rate increases, and securing capacity,” he emphasized. “Focusing on just one [of those] will leave you exposed to either higher-than-necessary costs due to high rates in a softening economy, or a lack of capacity in an expanding marketplace. In addition, shippers need to be aware of an unusually high level of uncertainty surrounding the energy market – a market already prone to extreme volatility.”

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