FTR Associates on Thursday, Sept. 22, announced that its Shippers Condition Index edged lower in July to a current reading of -3.8. 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.
After a brief term of improving conditions for shippers, FTR says the SCI once again has begun to fall as had been expected. The deterioration reflects the current trucking situation in which demand has utilized the available fleet capacity completely, leaving little room for even modest seasonal increases in activity. FTR is forecasting a declining environment for shippers through the remainder of this year and well into 2012.
“Events are unfolding as we had projected with regard to shipping conditions,,” says Larry Gross, FTR senior consultant. “Carriers have ‘right-sized’ to meet current demand levels and are reluctant to add capacity given the high level of economic uncertainty. Moreover, tightening driver availability means that even those truckers that wish to add capacity are finding it difficult to do so.”
The result, Gross says, is higher freight rates, even in the face of the soft economy. “We expect this situation to persist into next year, as expected new government trucking regulations will reduce the productivity of the trucking industry and therefore its effective capacity.”