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Tightening capacity causes drop in shipper conditions in December

BLOOMINGTON, Ind. -- Tightening capacity lead to a drop in the FTR Associates’ Shippers Conditions Index (SCI) in December, which came in with a reading of -4.9.


BLOOMINGTON, Ind. — Tightening capacity lead to a drop in the FTR Associates’ Shippers Conditions Index (SCI) in December, which came in with a reading of -4.9.

FTR officials said that the capacity crunch is expected to get significantly worse by mid-2013.

“Transport costs will continue to rise as freight continues to grow and new federal regulations reducing trucking capacity kick in, with the SCI reading expected to be about five points lower than the current reading by mid-summer,” FTR officials said in a release.

The Shippers Conditions Index is a compilation of factors affecting shippers transport environment. Any reading below zero indicates a tough environment for shippers. Readings below 10 signal that conditions for shippers will be near critical levels, based on available capacity and expected rates.
 
“Despite recent problems emanating from issues at the federal level, most indicators point to continued modest growth in both the economy and freight markets,” said Jonathan Starks, director of transportation analysis for FTR.

“The biggest transport issue that arose at the end of 2012 was the reduction in inventories. Shipping managers will be quickly turning their attention to the looming Hours-of-Service changes that are scheduled for July 1. Those rules will have a varied impact on shippers depending on how their operations are currently set up. Many will take a substantial hit to the productivity of their trucking operations, some as great as a 10% hit. The need for additional equipment and drivers will create additional pressure for truck rates to move higher later in the year.”


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