FTR’s Shippers Conditions Index sees first decrease in five months

The run of four straight months of growth in the Shippers Conditions Index (SCI) from freight transportation consultancyFTRcame to an end in March.

FTR describes the SCI as an indicator that sums up all market influences that affect the transport environment for shippers, with a reading above zero being favorable and a reading below zero being unfavorable and a “less-than-ideal environment for shippers.”

In March, the SCI came in at 0.4, which FTR described as “a near neutral reading” on the heels of four months of more favorable market trends for shippers.

FTR said that the risk of diesel prices rising has put pressure on the fuel cost component of the SCI, which was reflected in the March decline, although it said the SCI is expected to remain in positive territory until at least late 2016 as weakening freight conditions continue to benefit shippers.

““Demand for trucking and rail services has been sluggish so far in 2016,” said FTR COO Jonathan Starks in a statement. “The upside for shippers is that capacity has loosened relative to where it has been over the last couple of years, and some contract rate negotiations have shown sizable declines. Anecdotes indicate as much as a double-digit drop in base contract rates, although the data that we track show negative pricing in the dry van market is generally offset by merely weak pricing in other segments. The high inventories that are persisting in the retail supply chain seem to be impacting the dry van market much more significantly. We are nearing a point in time where the chance of another round of capacity shortages would bring even more pressure to build inventories. At the same time, macroeconomic forces could weaken sales enough to kick off a traditional round of inventory reductions. Maintaining adequate stock levels under these countervailing pressures will test the best logistics functions.”

而经济格局与confl混乱icting pros and cons like lower gas prices compared to a year ago and loose capacity as part of the former and sluggish industrial output and cautious consumers as part of the latter, ongoing uncertainty is having an impact on shippers’ supply chain operations from various perspectives, including strategy, planning, and procurement.

This, in turn, has seen shippers try to lock in more contractual pricing instead of spot pricing, with carriers able to leverage that into future capacity commitments.
Industry stakeholders have told LM 2016 is has been an interesting one for shippers to date, depending on economic growth levels and expected significant impact of industry regulations like electronic logging devices, and the possible resumption of motor carriers hours of service rules, among others.