Federal regulations — like the upcoming hours-of-service rules scheduled to take effect July 1 — will tighten an “already tight truck capacity” even further due to reduced driver productivity, driving up shipping costs, according to FTR Associates monthly Shippers Conditions Index.
The Index itself dropped two points to a reading of -9.5. Any reading below zero “indicated a less-than-deal environment for shippers,” FTR says. Moreover, the SCI is expected to further “deteriorate” in the second part of the year.
“Although substantial uncertainty exists with regard to the near-term path of the economy, shippers need to be prepared for a difficult second half of the year. If the current path of slow economic growth remains intact and the courts do not delay the implementation of the new hours-of-service framework (a development we view as increasingly unlikely), then the stage will be set for a significant tightening of truck capacity, resulting in reduced service levels and higher rates,” says FTR Senior Consultant Lawrence Gross. “While the situation is similar in some respects to the last such occurrence in 2004, there is one important difference. While 2004 was a relatively short-term blip, we believe that 2013 will be the door-opener for a prolonged period of difficulties that could last several years.”