Silver Lining: Lousy Economy Keeps Capacity under Control

June 18, 2012
April was basically a lost month, with shipping conditions not getting any better but not getting any worse.

The good news for shippers is that things didn’t get any worse over the past month; the bad news is that things were already pretty bad. FTR Associates is reporting that its Shippers Conditions Index (SCI) for April was basically unchanged from the previous month, with a moderately negative reading of -5.4.

The index is expected to remain in a tight range throughout the summer, potentially deteriorating marginally in the latter part of the year. The real negative impact to shippers will begin to occur in 2013 as new Hours of Service rules are expected to put a significant drain on trucking capacity.

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 lackluster performance of the economy has had a silver lining for shippers as slow growth in truck freight demand has not caused capacity to tighten to a great extent, keeping a lid on rates,” says Larry Gross, senior consultant for FTR. “The moment of truth has been delayed but not avoided. We still expect shipping conditions to deteriorate as we move into 2013 unless external events such as the European debt crisis send the economy back into a tailspin – an event that is possible but not considered likely as of this point.”

Related Articles:

Shippers Search in Vain for Better Conditions

Capacity Tightens as Conditions Get Tougher for Shippers

Not Getting Any Better for Shippers Any Time Soon