NASHVILLE, Ind. -- Conditions for shippers fell in July, according to FTR Associates’ Shippers Conditions Index (SCI), to a reading of -4.5. The SCI sums up all market influences that affect shippers; a reading above zero suggests a favourable shipping environment, while a reading below zero is unfavourable.
FTR officials said the decrease marks the start of an “expected steady decline as shippers and carriers feel the impact of increased regulatory drag heading into 2013.”
FTR characterizes the current period “as an inflection point where costs and rates will begin moving up if the US economy continues to sustain a relatively healthy freight market as new regulations take hold.” Officials added that 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, senior consultant for FTR. “This assumes that the Euro crisis remains contained and that the federal government does not drive the economy off the ‘fiscal cliff’ at year-end. 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.”