FTR Associates’ Shippers’ Condition Index (SCI) has moved upward again this month, signifying improving conditions for shippers. The current SCI as reported in the firm’s July Shippers Update rose to a reading of -3.6 from the -5.4 reported last month.
While the negative SCI reading indicates that overall conditions are still viewed as unfavorable from the standpoint of the shipper, FTR says the situation is considerably less acute than it was earlier this year. However, assuming the rate of growth in the economy improves as expected in the second half of the year, the SCI is projected to deteriorate once again as growing freight demand strains carrier capacity. According to FTR, the SCI sums up all market influences that affect shippers; a reading above zero suggests a favorable shipping environment, while a reading below zero is unfavorable.
“The improvement in the SCI must be regarded as a mixed bag in that it is the result of tepid demand from shippers and therefore is a product of the current softness in the economy,” says Larry Gross, senior consultant for FTR. “While most shippers are currently seeing sufficient capacity to haul their goods, this will soon begin to change.
“Truckload rates will begin to move upward again during the fall shipping season, and are expected to rise dramatically in 2012 as new regulations are implemented putting a drag on the entire trucking segment. Of course, all of these projections would be thrown into question in the event of a failure in the Federal debt ceiling negotiations or some other external shock to the economy.”
The July Shippers Update includes commentary discussing the timing of freight rate increases relative to tightening capacity. For more information about how to subscribe to the Shippers Update, send an e-mail to email@example.com or call 888-988-1699 ext. 1.