Shipping conditions will worsen in 2018: FTR

BLOOMINGTON, IN – Fuel cost increases following Hurricanes Harvey and Irma, and increased logistic costs for shippers, caused shipping conditions in the United States full-load market to take a negative turn for the month of August, according to analysts at FTR Intelligence.

Although the increased fuel costs are temporary, the group says it expects the increase in logistics costs to continue into 2018.

Spot prices continue to rise as the labor market tightens, leaving fleets with no excess capacity. This labor pressure isn’t expected to ease anytime soon, FTR said, which will keep shipping conditions down in the new year.

Jonathan Starks, chief operating officer at FTR, said the decrease in available trucks is leaving shippers in a tough position.

“We have known for some time that the trucking industry has been operating with very little excess capacity, however, the weak pricing environment masked that phenomenon for the last year,” he said. “Hurricanes Harvey and Irma exposed shippers to this new reality. There just wasn’t enough excess capacity to deal with spikes, and the result was a significant spot market pricing gain that persisted through early October.”

Starks says spot rates have begun to normalize, but they are still up more than 20% compared to the same time last year. He says contract pricing is also starting to climb, and is likely to continue that trend into 2018.

“When you couple the Hurricane impacts with increased freight demand and the fast approaching ELD implementation, there’s a real fear that loads won’t get delivered,” said Starks.

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