Capacity Will Be Tight for at Least the Next Two Years

Companies expecting a favorable climate for shippers in 2012 will likely be disappointed, based on the latest market trends from FTR Associates. FTR’s Shippers Conditions Index (SCI) for December edged up roughly 1-1/2 points from the previous month to a reading of -4.6, which still reflects a somewhat adverse environment for shippers. The small improvement reflected a slight easing in demand for transport 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. FTR reports that the tight equilibrium between demand and transport capacity will keep the SCI stable in modestly negative territory until 2013, when it will slip further due to regulatory drag on capacity from the Hours-of-Service (HOS) rule implementation.

“Conditions will continue to be difficult for the nation’s shippers, even though economic growth is still anticipated to be lackluster,” says Larry Gross, senior consultant for FTR. “If the recent spate of good economic news translates into more robust economic growth, capacity would tighten significantly and greater upward pressure on freight rates will result.”

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