Blue Christmas: Current Conditions Have Shippers Crying, “Ho-Oh-No!”

Dec. 18, 2013
Continued regulatory pressures, a sluggish recovery and a lack of new capacity are responsible for less-than-bright prospects for shippers in the new year.

In its final assessment of shippers conditions for 2013, transportation analyst firm FTR Associates reports that its Shippers Conditions Index (SCI) stands at a current reading of -7.5. All things being equal, the SCI will probably stay near that level for the near future. Since logistics conditions by their nature are volatile, however, it’s more likely that continued regulatory pressures and a sluggish recovery depressing any sustainable growth in demand, plus the trucking industry standing pat with existing capacity, could drive the SCI even further down.

The SCI takes a number of factors into consideration, and any score under zero indicates a less-than-ideal environment for shippers. Conditions being what they are, the SCI has basically been underwater all year.

“The effects of the continuing rollout of new regulations makes for an unusually challenging forecasting environment because both the timing and final structure of many proposed regulations are not firmly established,” says Larry Gross, senior consultant for FTR. “Our forecast, based on the best information we have available at this time, is that regulation will be the principle cause for tighter capacity and higher rates in the coming year.” In particular, Gross points to the new Hours-of-Service regulations, where some truckload carriers have reported productivity losses of 3%-5% due to restricted hours that truck drivers can be behind the wheel.

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