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Dog Days of Summer Continue: Higher Costs, Fewer Trucks

July 25, 2014
The winter storms are but a distant memory now, but their impact on the logistics industry continues to be felt throughout the heat of the summer.

In her recent State of Logistics Report, transportation analyst Rosalyn Wilson predicts that “2014 will be a banner year.” However, that message hasn’t quite gotten through to the shipper community yet, as the latest monthly Shippers Condition Index (SCI), as tabulated by transportation forecasting firm FTR, has a score of -7.5, continuing a pattern seen every month this year of a reading well below zero, indicating a less-than-ideal environment for shippers.

“Although shippers are not struggling to find capacity as they were during the storms earlier in the year, capacity remains tight for both truck and rail,” says Eric Starks, president of FTR. “The driver shortage continues to limit trucking, while service levels on the rails have been an issue. Shippers are increasingly pressured to maximize capacity by collaborating with carriers to increase productivity.”

According to FTR, the SCI barely budged over the past month, improving only negligibly from -7.7 to -7.5. This lack of movement reflects a continuing tight capacity situation, with utilization rates remaining between 98% and 99%. And don’t expect things to get markedly better throughout the year, since FTR’s analysis points to increases in labor costs and purchased transportation. “Spot rates for truckload freight have risen as expected,” FTR notes, “with increases in contract prices anticipated with July reports.” So basically, shippers should expect to see their costs continue to increase to the end of 2014 at least.

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