Shipping Conditions Improve from Lousy to Slightly Less Lousy

July 22, 2011
The current improvement in capacity availability is largely due to tepid demand from shippers, the result of a soft economy. Things could get worse again real soon

The Shippers’ Condition Index (SCI), produced by transportation forecasting firm FTR Associates, has moved upward this month, signifying improving conditions for shippers. The current SCI rose to a reading of -3.6 from the -5.4 reported last month. While the negative SCI reading indicates that overall conditions are still viewed as unfavorable from the standpoint of the shipper, the situation is considerably less acute than it was earlier this year.

However, assuming the rate of growth in the economy improves as expected in the second half of the year, the SCI is projected to deteriorate once again as growing freight demand strains carrier 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.

Larry Gross, Senior Consultant for FTR commented on the expectations for their Shippers Conditions Index going forward,

“The improvement in the SCI must be regarded as a mixed bag in that it is the result of tepid demand from shippers and therefore is a product of the current softness in the economy,” explains Larry Gross, senior consultant for FTR. “While most shippers are currently seeing sufficient capacity to haul their goods, this will soon begin to change. Truckload rates will begin to move upward again during the fall shipping season, and are expected to rise dramatically in 2012 as new regulations are implemented putting a drag on the entire trucking segment.”

Gross adds, “Of course, all of these projections would be thrown into question in the event of a failure in the Federal debt ceiling negotiations or some other external shock to the economy.”

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