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FTR: Freight demand remains strong in ‘unfavorable’ shipping environment

April 26, 2018
Regulatory pressures are rising, and the capacity required for a hot freight market was slow to increase in the first quarter.

Regulatory pressures are rising, and the capacity required for a hot freight market was slow to increase in the first quarter, putting pressure on rates, according to FTR analysis.

The February Shippers Conditions Index reading from FTR was unchanged from January at -11.1, reflecting an unfavorable environment for shippers.

Freight growth during the first quarter typically softens after a strong holiday season, but not in 2018. FTR’s truck loadings index is expected to see growth of 4% to 6% year over year into 2019. A continued capacity crunch in the truckload segment could result in bleed-over of freight volume to LTL which would further increase shippers’ costs, FTR noted.

“Shippers remain in the throes of a pro-carrier environment,” said Jonathan Starks, chief operating officer at FTR. “Every major indicator of demand – manufacturing, payroll employment, retail sales, housing construction – is at least at the strongest level since the Great Recession. Unemployment is at a 17-year low, and the driver shortage continues to create capacity constraints.”

“Rates on the spot market continue to remain elevated, and we don’t expect to see any significant downward rate pressure – whether spot or contract – until at least 2019,” Starks added. “Shippers should not expect to get near-term relief from spot rates that are at or near record levels. Securing capacity at a reasonably higher price remains the key challenge for shippers.”

“Intermodal rates are expected to follow truck rates higher and grow at more than 5% compared with the 2017 period through the balance of the year,” commented Todd Tranausky, senior research analyst at FTR. “The next few months will see rates grow even faster, leaving shippers paying more to move their goods in a tight freight market.”

The April issue of FTR’s Shippers Update details the factors affecting the February Shippers Conditions Index, along with reports on the mood of carriers attending the Truckload Carriers Association meeting in late March.

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