It is said what goes down must go up and so it with freight conditions—which are now favoring shippers more, according to forecasting firm FTR Associates. But the good news for motor carriers is those conditions will shift down once more when the economy picks up steam again, which FTR predicts will occur later this year, and when Federal regulators begin implementing new truck-driver rules..
But right now, in what it terms a “significant reversal”— breaking a long-term decline— FTR stated today that its Shippers’ Condition Index (SCI), as reported in the forecasting firm’s June Shippers Update, improved dramatically to a reading of -5.4 from -11.4 the prior month.
This indication of a “healthier environment for shippers” is due to a slowdown in freight- demand growth due to the “current lull in economic activity as well as further delays announced in the implementation of new Federal trucking regulations.”
FTR said its SCI sums up all market influences that affect shippers. A reading above zero suggests a favorable shipping environment, while a reading below zero is unfavorable.
“The current ‘soft spot’ in the recovery is providing some breathing room for shippers as the growth in freight has slowed,” explained Larry Gross, senior consultant for FTR. “At the same time, we have moved back our forecasts for regulation-based tightening of the supply of trucks, as the Federal government has delayed the implementation of new driver regulations.”
However, Gross pointed out the implementation delay by the Feds is “a temporary respite in our view” and what is more, “the SCI will start to deteriorate once again as the economy begins to re-accelerate later this year.
“As the new trucking regulations begin to kick in,” he added, “shipping costs will increase through 2012 with transport costs such as fuel, equipment and labor rising faster than the general rate of inflation.”
FTR noted its June Shippers Update includes commentary discussing the overall economic climate and regulations that will affect shipping capacity.
The Shippers Update, launched by FTR Associates during 2010 as a part of the firm’s Freight Focus Series, looks at conditions that will affect the cost and efficiency of shipping goods via all transportation modes