Capacity Tightens as Conditions Get Tougher for Shippers

Although some sectors of the economy are still waiting for visible evidence of a recovery, shippers have all the proof they need in the tightening of trucking capacity. The Shippers Conditions Index (SCI) for February 2012, compiled by transportation forecasting firm FTR Associates, dropped by a full point from the previous month to -5.6, as demand for trucking services grew strongly in what is normally a slack month.

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. A still-strengthening economy is reducing capacity available to shippers, according to FTR. The SCI should remain in a relatively tight range through 2012 and then fall into more negative territory as Hours of Service regulations are implemented in 2013, which could further limit the availability of trucks and truckers.

“February was unusually strong, with demand for trucking services rising over 4% year-over-year,” says Larry Gross, senior consultant for FTR. “This effectively ‘sets the table’ for a relatively tight capacity situation going forward as demand ramps up seasonally in the coming months. We therefore expect the balance of pricing power to remain firmly on the side of the carriers for the balance of the year.”

Related Articles:

Not Getting Any Better for Shippers Any Time Soon

Capacity Will Be Tight for at Least the Next Two Years

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