Shippers Conditions Index remains negative

July 18, 2013

The May Shippers Conditions Index (SCI) is mostly unchanged from previous months and remains in modestly negative territory, FTR Associates, which produces the Index, said.

The May reading is -7.5. Readings below 10 signal that conditions for shippers are approaching critical levels based on available capacity and expected rates, FTR said. The SCI is a compilation of factors affecting shippers’ transport environment.

The SCI level is indicative of tight capacity but only modest rate hikes by truckload carriers, the firm added. 

The rate picture continues to be quiet, although FTR is forecasting an acceleration in rates for the second half of the year as new regulations, including hours-of-service, are expected to take capacity out of trucking. This convergence of negative factors for shippers will be reflected in a declining SCI, FTR said.

Details of the factors affecting the May Shippers Conditions Index are found in the July issue of FTR’s Shippers Update published July 12.

“The sluggish economy and freight environment that has persisted for nearly two years now, has created an environment in which shippers have been able to secure low rate increases despite fleets operating with fairly small amounts of spare capacity,” said Jonathan Starks, director of transportation analysis. “The introduction of more restrictive hours-of-service regulations for drivers on July 1 means that the amount of excess capacity in the system has shrunk even more. As long as freight levels continue to inch upward truck rates are likely to begin a more significant pattern of increases. If nothing else, fleets will be looking to cover their increased operating costs for drivers, in addition to taking advantage of the reduction in spare capacity that generally drives upward movement in truck rates.”

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