FTR’s Shippers Condition Index continues to decrease

Typically, when things are going well for carriers, it often means they are not going as well for shippers. Based on the most recent edition of the Shipper Conditions Index (SCI) from freight transportation consultancyFTR Associatesthat appears to be the current trend.

January’s SCI, which represents data for the most recent month available, was -7.1, which is down 2 percentage points from December. A reading above 0 suggests a favorable shipping environment, and FTR describes the SCI as an indicator that sums up all market influences that affect shippers, with a reading above zero being favorable and a reading below zero being unfavorable. May 2011’s -11.4 was the worst SCI reading of this current economic cycle.

FTR said that the SCI represents “deteriorating conditions” for shippers early in 2013, with the SCI forecast expected to continue moving down as the year moves on, approaching negative double-digits by the end of 2013.

This, said FTR, will result in increased freight rates as volumes continue their slow crawl, with capacity expected to be hindered by regulations, including motor carriers hours-of-service (HOS), which is expected to kick off in July and limit available time trucks can spend on the road with subsequent increases in rates and decreases in available capacity.

FTR Senior Consultant Larry Gross told LM that back in 2004 there was a combination of a change in HOS and a growing economy, which resulted in about two years of freight increases.

“Now, this year, we have a raft of regulatory changes, plus a growing economy, with the new HOS rules as currently constructed likely to stand,” he said. “We are setting ourselves up for a 2004 replay, but the pressure on the driver supply and capacity is going to be considerably longer than the one-shot event that occurred in 2004. So we see the prospect for a negative rate environment extending much further.”