Chain of Thought

Shippers Conditions in a Word: Yikes!

The current state of the logistics industry is pretty similar to the current state of the economy: We’ll take whatever good news we can get, even if the only good news is that the bad news has gotten slightly less bad.

For instance, FTR Associates just announced the latest Shippers Conditions Index score for March, which came in at a not-so-robust -7.3 (any score that comes in below zero means the environment is less-than-ideal for shippers). So looking at that score, your first thought could very well be, “Yikes!” But not so. That score actually indicates a decent improvement over the previous month’s score, a downright scary -9.5 (any score that reaches -10.0 means conditions for shippers are approaching critical levels, based on available capacity and expected rates).

At the risk of torturing an analogy, think of shipper conditions like a professional baseball team on a losing streak. Any way you look at it, a seven-game losing streak is pretty bad, but it sure looks better than a nine- or ten-game losing streak.

“Current shipping conditions remain calm but storm clouds are on the horizon,” says Lawrence Gross, senior consultant for FTR. “Every indication is that the Hours of Service regulatory changes will occur as scheduled July 1, which FTR projects will reduce trucking productivity by about 3%. While our estimate of the productivity hit is less severe than some, even a 3% decline will be sufficient to tip the balance of supply and demand significantly away from shippers, assuming the economy continues to maintain at least the anemic growth levels seen recently. This will usher in an extended period of difficulty for shippers, as there is an array of new regulations lined up behind the HOS change that will further impact trucking in the months and even years to come.”

I don’t know about you, but after hearing that, even wearing rose-colored glasses, I’m still tempted to say, “Yikes!”

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