FTR Shippers Condition Index shows tougher environment

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FTR Associates’ Shippers Condition Index released Wednesday, Nov. 9, fell in September by 0.9 points from the previous month to a current reading of -4.7. 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.

The SCI indicates that conditions have resumed deteriorating from the shipper’s perspective after a period of relatively better conditions this summer. But FTR says the decline is relatively modest so far and conditions are still significantly better than they were early in the year.

“With freight carriers maintaining tight discipline on capacity and pricing, even the recent very modest growth in the economy has been sufficient to drive increasing rates,” says Larry Gross, FTR senior consultant. “Most critical for the 2012 outlook is the ultimate resolution of the pending ruling on changes in hours-of-service regulations for truck drivers.”

Gross said if the courts do not issue a stay as a result of the inevitable legal challenges, then shipping conditions will worsen dramatically in 2012 as a result of extremely tight trucking capacity. “Rate escalation and actual trucking capacity shortfalls could be the result,” he said.