FTR’s January Shippers Conditions Index Reflects a Tough Capacity and Rate Environment with No Relief in Sight

FTR is forecasting a tough year for shippers on capacity and rates, and their January Shippers Conditions Index (SCI) at -11.1 reflects the challenges they are facing entering into the new year. Rate growth year-over-year is expected to accelerate in Q2 before easing slightly in the second half of 2018. Full ELD compliance and a continuing driver shortage offer no real optimism for shippers. They will need to address freight transportation productivity, and their role in improving it, to counter the inevitable rising transportation costs associated with the current environment.

Jonathan Starks, Chief Operating Officer at FTR, commented, “The relationship between carriers and shippers tends to swing on a pendulum – with freight demand high and capacity tight, carriers are benefiting. Numerous companies are announcing that domestic freight costs are at record levels. Since carriers currently hold such a strong position, shippers need to be hyper-focused on their relationships with carriers.”

Avery Vise, Vice President of Trucking Research, added, “We are beginning to see the implementation, by both shippers and carriers, of the productivity enhancements that we have been expecting to happen. The elevated rate environment is not expected to be a short-lived event and continued progress will be necessary. There seems to be no single solution, and we are seeing many different routes to addressing the tight capacity environment, from changing driver requirements to increased driving school enrollment to increasing detention payments.”

Todd Tranausky, Senior Research Analyst at FTR, commented, “Shippers should be flocking to rail carload and intermodal solutions, given the tight trucking market. But so far, the data has not shown that to be true. Intermodal volumes are growing but are limited by constraints of equipment and service levels. Carload volumes, however, are still below 2017 levels through the first 11 weeks of the year. This unwillingness to convert traffic only exacerbates the truck capacity situation.”

The March issue of FTR’s Shippers Update, published March 5, 2018, details the factors affecting the January Shippers Conditions Index, along with a big-picture overview of drivers and capacity.

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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