Chain of Thought
Shipping Conditions Continue to Circle the Drain

Shipping Conditions Continue to Circle the Drain

Conditions for shippers improved in September, but the situation overall is so uninspiring that you can easily be excused if you didn’t notice things getting any better. According to the Shippers Condition Index (SCI) developed by transportation forecasting firm FTR Associates, the SCI rose nearly a full point (0.8 points) from August, resting at a current reading of -7.9 (yes, that’s a negative sign in front of the 7).

What does that score actually mean? First of all, the SCI takes into account a number of factors that affect shippers as they transport goods. A score below zero (0.0) means that shipping conditions are less-than-ideal. A score of -10.0 or worse means conditions have reached critical levels, in terms of available capacity and expected freight rates. So a score of -7.9 only looks good when compared to the -8.7 score from the previous month.

“The productivity effects of the Hours of Service (HOS) revisions are coming in about where we expected and rates are beginning to move upward in response,” says Larry Gross, senior consultant for FTR. “However, we are hearing anecdotes from carriers regarding experienced drivers who are becoming fed up with the lack of flexibility and personal control over where and when they can take their extended rest period and are turning in the keys to their truck for good. We have not included such driver losses in our projections and therefore our view of the anticipated effects of the HOS revisions may have been understated.”

Gross points out that truckload carriers, for instance, are reporting HOS productivity losses in the range of 3%-5%. Also, owner/operators are said to be exiting the trucking industry despite the fact that freight tonnage is still on the rise. Gross expects that the SCI will take another downward drop in late 2013, moving closer to the dreaded -10.0 vortex.

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