NASHVILLE, IN — FTR Associates’ Shippers Conditions Index (SCI) for July dropped to a reading of -4.5.

The decline was expected, FTR said, as as shippers and carriers feel the impact of increased regulatory drag heading into 2013.

The current period is an inflection point where costs and rates will begin to move up if the U.S. economy continues to sustain a relatively healthy freight market as new regulations take hold, FTR explained.

The forecasted tightening of capacity and associated increased shipping costs will continue to negatively impact the SCI — 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,” explained 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.”