While still in a very challenging environment, the measures used in computing the FTR Shippers Condition Index indicate that the worst may be behind for shippers. The SCI for July, released this week, stands at -9.9; it did not move much from the previous monthly reading of -9.5.
Earlier in the year the SCI reading was in double-digit negative territory. FTR forecasts the index to moderate from this point forward until reaching the “least unfavorable” level on this cycle around mid-2019. Key freight generators – manufacturing, construction, retail sales, and the inventories-to-sales ratio – remain strong with a positive outlook for the coming months.
“Stabilization in rail service levels and some easing in the trucking market led to a steady SCI this month," said Todd Tranausky, vice president for rail and intermodal at FTR. "But conditions have not shown any sign of improvement for shippers as they head toward peak season and a potential end-of-year rush before new tariffs take effect on Jan. 1. While things are stable, the SCI indicates that things remain far from ideal for shippers.”
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.
