FTR Associates on Monday, July 18, announced that its Shippers’ Condition Index has moved upward again in July, signifying improving conditions for shippers. The current SCI rose to a reading of -3.6 from the -5.4 reported last month. The SCI sums up all market influences that affect shippers; a reading above zero suggests a favorable shipping environment, while a reading below zero is unfavorable.
FTR says that while the negative SCI reading indicates that overall conditions still are viewed as unfavorable from the standpoint of the shipper, the situation is considerably less acute than it was earlier this year. However, assuming the rate of growth in the economy improves as expected in the second half of the year, FTR projects that the SCI will deteriorate once again as growing freight demand strains carrier capacity.
“The improvement in the SCI must be regarded as a mixed bag in that it is the result of tepid demand from shippers and therefore is a product of the current softness in the economy,” says Larry Gross, FTR senior consultant. “While most shippers are currently seeing sufficient capacity to haul their goods, this will soon begin to change.”
Gross says truckload rates will begin to move upward again during the fall shipping season, and are expected to rise dramatically in 2012 as new regulations are implemented, putting a drag on the entire trucking segment. “Of course, all of these projections would be thrown into question in the event of a failure in the federal debt ceiling negotiations or some other external shock to the economy,” he says.