Shippers Conditions Index declines in July

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FTR Associates on Friday, Sept. 14, said its Shippers Conditions Index for July fell to a reading of -4.5, starting the expected steady decline as shippers and carriers feel the impact of increased regulatory drag heading into 2013. 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 said the current period begins what it characterizes as an inflection point where costs and rates will begin moving up if the U.S. economy continues to sustain a relatively healthy freight market as new regulations take hold. The forecasted tightening of capacity and associated increased shipping costs will continue to negatively impact the Shippers Conditions Index unless the economy slows more than expected.

“FTR’s base outlook calls for shipping conditions to deteriorate as freight volume grows slowly and government regulations are implemented, adversely affecting driver productivity,” said Larry Gross, FTR senior consultant. “This assumes that the euro crisis remains contained and that the federal government does not drive the economy off the ‘fiscal cliff’ at yearend. If either scenario occurs, we would consider a recession likely, causing freight demand to drop and eliminating any potential capacity issues and driving improvement in shipping conditions.”