Outlook for Shippers Is Getting Grimmer

Aug. 15, 2012
The disappointing economy has shippers in a holding pattern, which will worsen as we approach 2013.

FTR Associates’ Shippers Conditions Index (SCI) for June was basically unchanged from the previous month and remains in near neutral territory at a reading of -1.8. 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 current reading reflects the inability of carriers to increase rates in an economic recovery that at best can be described as disappointing, so shippers are holding their own right now. However, the index is expected to fall as we head into 2013 when regulations affecting trucking fleet productivity will reduce available shipping capacity and put a strain on shippers’ ability to find fleets willing to haul their freight at rates that are advantageous to them.

“The freight markets are currently in a state of fragile equilibrium, which we expect to persist in some form through the peak shipping season,” says Larry Gross, senior consultant for FTR. “Weak economic growth is leading to very slow growth in freight demand. This is being countered by strong discipline by carriers, resulting in an environment where rates are rising quite slowly and capacity remains generally available.”

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