How’s this for a summer send-off? Not only are conditions for shippers rapidly deteriorating, but there are signs that the economy as a whole is stuck in a rut from which it may not recover any time soon. At least, that’s according to analysis conducted by transportation forecasting firm FTR.
After a brief taste of positive trends a couple months back, the FTR Shippers Condition Index (SCI) has taken a decidedly negative turn for the worst, dropping to -4.9 in the most recent monthly report. The SCI is a compilation of factors affecting the shippers transport environment. Any reading below zero indicates a less-than-ideal environment for shippers. Readings below 10 signal that conditions for shippers are approaching critical levels, based on available capacity and expected rates.
FTR believes that the SCI will continue to fall further into negative territory now that any bump from soft market conditions created by temporary cessation of regulatory drag and fuel cost reductions are evaporating. While not quite hitting the dangerous -10 threshold, FTR expects the SCI to settle into a high single digit negative reading through the balance of the year.
“All current indicators point towards the timely implementation of ‘big ticket’ truck regulations in the near future, including electronic logging devices, speed limiters for heavy trucks, and the National Drug and Alcohol Database,” says Larry Gross, senior consultant with FTR. “These among other regulations will have a profound effect on available truck capacity creating a shortage. The near-term crisis may be postponed if the economy slows significantly, however, something we are now watching for very closely given multiple warning signs in the economy.”