Chain of Thought
Dave Blanchard

Dave Blanchard

The Year of Shipping Dangerously

If you breathed a huge sigh of relief when 2013 ended, figuring things just had to start getting better now that there was a new year on the calendar, then you’re not alone. A quick glance below at FTR Associates’ Shippers Conditions Index (SCI)—a monthly look at the state of the environment for manufacturers, retailers, wholesalers and other companies with freight that needs to be hauled—reveals that every month in 2013 was worse than the corresponding month in 2012. And actually, that only takes into consideration the first 11 months of the year; final numbers for December 2013 aren’t in yet.

In November 2013, the SCI was a somewhat sickly -6.0 (any month with a score under 0.0 indicates a less-than-favorable environment for shippers). On the bright side, it was the third straight month that index improved from the previous month. On the gloomy side, FTR anticipates capacity continuing to tighten in the coming months.

“We are currently seeing things tighten up in the market, and it is not yet reflected in the November numbers. I would expect to see the SCI index weaken further as we move through the first quarter,” says Eric Starks, president of FTR. He adds, rather unambiguously, “This is not a good sign for shippers.”

Looking at early results for December, Starks notes, “In early December, we saw a spike in capacity utilization and it was exacerbated by the recent storms. It will be interesting to see if the tightness continues as we start to approach February. If it does, then we will likely see a surge in shipping rates for all of 2014, as shippers typically put out bids and lock-in contract rates in the first quarter for the balance of the year.”

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