The FTR Shippers Conditions Index (SCI) for August fell further into negative territory to a reading of -1.79. Just four months after the strongest market conditions on record, shipping conditions in August were the weakest in two years.
While most factors affecting the Shipping Conditions Index in August were equal to or more favorable than in July, the rate environment was significantly more unfavorable for shippers. The short-term outlook is for the SCI to improve; however, it is expected to become significantly negative in the second half of 2021 primarily due to tighter capacity and higher shipping rates.
A rapid rise in freight volume coming out of the pandemic as retailers try to restock shelves quickly ahead of the holiday shopping season has created a deterioration in shippers’ power with carriers,” said Todd Tranausky, vice president of rail and intermodal at FTR. “The good news is that things should hold fairly neutral in the first half of 2021, but shippers will face more negative pressures in the final two quarters of 2021.”
The October issue of FTR’s Shippers Update, published October 7, provides a detailed analysis of the factors affecting the August Shippers Conditions Index and provides the forecast for this index through August of 2021. The additional commentary in this report focuses on the contrasts between the total freight market and the current strong spot market.
