FTR’s Shippers Conditions Index (SCI) continued to fall in October to a reading of -9.6. Truck rates, both spot and contract segments, have increased for shippers. This is an immediate reflection of the tight truck market. After the holiday blitz, tight capacity should ease somewhat in Q1 2018, as it typically does, before peaking again in the Spring. However, there is additional downside risk to the SCI for early 2018 if contract rates jump substantially or the electronic logging device (ELD) effects are more pronounced than expected.
The December issue of FTR’s Shippers Update, published December 08, 2017, details the factors affecting the October Shippers Conditions Index, along with discussion covering expectations for a healthy Class 8 equipment market in 2018.
Eric Starks, Chairman and CEO at FTR, commented, “Conditions for trucking and shipping have been diverging dramatically since the hurricanes hit in August. The hurricanes highlighted the lack of extra capacity available in the system. This has been followed by continued strong freight conditions in Q3 and into Q4. Shippers are really feeling the pinch right now, and there is fear that the ELD mandate will impact capacity in the spring. We have essentially hit the 100% capacity mark – there is little, if any excess truck capacity. Add in regulations, continued freight growth, or winter storms and we could be pushing that above 100%. That would leave shippers scrambling to get loads delivered. And that means paying premium rates for those deliveries. It may be a tough first half of 2018 for shippers.”
The Shippers Conditions Index tracks the changes representing four major conditions in the U.S. full-load freight market. These conditions are: freight demand, freight rates, fleet capacity, and fuel price. The individual metrics are combined into a single index that tracks the market conditions that influence the shippers’ freight transport environment. A positive score represents good, optimistic conditions. A negative score represents bad, pessimistic conditions. The index tells you the industry’s health at a glance. In life, running a fever is an indication of a health problem. It may not tell you exactly what’s wrong, but it alerts you to look deeper. Similarly, a reading well below zero on the FTR Trucking Conditions Index warns you of a problem….and readings high above zero spell opportunity. Readings near zero are consistent with a neutral operating environment. Double digit readings (both up or down) are warning signs for significant operating changes.
For more than two decades, FTR has been the thought leader in freight transportation forecasting in North America. The company’s national award-winning forecasters collect and analyze all data likely to impact freight movement, issuing consistently reliable reports for trucking, rail, and intermodal transportation, as well as providing demand analysis for commercial vehicle and railcar. FTR’s forecasting and specially designed reports have resulted in advanced planning and cost-savings for companies throughout the transportation sector.
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