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FTR: Conditions Improved for Shippers in May; Index Projected to Deteriorate

July 17, 2012, 07:30 AM
Filed Under: Transportation

FTR Associates’ Shippers Conditions Index (SCI) for May improved to a near neutral reading of 1.9. 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 current reading reflects an economy that is treading water accompanied by matching softness in labor, purchased transportation and warehouse costs for shippers. Barring a recession in the U.S. economy (which FTR does not project in the absence of outside pressures such as financial failure from the European debt crisis), the index is projected to once again deteriorate slowly but steadily through Q3 and Q4 2012 and into 2013, at which point capacity is expected to tighten dramatically due to regulatory pressures on trucking fleets. Details of the current factors affecting the May Shippers Conditions Index are found in the July issue of FTR’s Shippers Update published July 10.

Larry Gross, Senior Consultant for FTR, commented, “With the economy recently nearing stall speed, economic growth has dropped below the threshold required to drive growth in freight demand. While we do not expect this situation to persist, for the moment slack demand is restricting the ability of carriers to raise rates. While we do expect capacity to begin to tighten as the year progresses, delays in the implementation of Federal trucking regulations are also working to reduce the potential impact.”

The Shippers Update, launched by FTR Associates during 2010 as a part of the firm’s Freight Focus Series, looks at conditions that will affect the cost and efficiency of shipping goods via all transportation modes. North American shippers will find in one reference the essential information they need on freight volumes, equipment capacity and transport costs and rates. The Shippers Update has both history and forecasts for four modal options: truckload, less-than-truckload, intermodal and rail carload. The analysis includes the breakdown of total truck and rail volumes into major commodity segments. It also provides historical snapshots of inland water and air freight markets. The freight data is augmented by an abundant collection of supporting data covering macro-economics and the fuel market.

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