2013 Preview: Capacity to Tighten as Shipping Costs Rise

Oct. 11, 2012
Freight markets “are mired in a sluggish but stable state,” says latest FTR analysis.

FTR Associates’ Shippers Conditions Index (SCI) for August fell to a reading of -6.8, reflecting a slowly tightening capacity environment for carriers and shippers. 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 SCI has dropped significantly over the past few months, from -1.8 in June to -4.5 in July and now -6.8 in August.

With an economy that continues to tread water, FTR expects the SCI to remain close to the current reading through the fourth quarter of this year. Shipping costs, along with the ability to find capacity, will begin to grow worse in 2013 as economic conditions improve just as new Federal regulations affecting trucking are implemented. The SCI readings will reflect the added challenges facing shippers at that time.

“Attendees at the recent FTR Transportation Conference concurred that freight markets currently are mired in a sluggish but stable state,” says Larry Gross, senior consultant for FTR. “Disciplined carriers are therefore holding back on any capacity additions, setting the stage for tightening as conditions evolve through the early part of next year. Barring another significant stumble in the overall economy, we expect things to look substantially different a year from now.”

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