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Not Much of a Horizon on the Horizon

Nov. 6, 2014
Prognosis for shipping season: Capacity is still tight for trucking, and service issues are still occurring for rail.

The Shippers Conditions Index (SCI), a monthly score tabulated by transportation forecasting firm FTR, improved somewhat in August, increasing 1.3 points to a score of -6.5 (compared to -7.8 in July). The fact that the SCI is still well below zero—a threshold that indicates a less-than-ideal environment for shippers—points to a sustained low level reflective of persistent capacity shortages and rising rates.

Based on FTR’s analysis, costs to ship goods in the current freight environment most likely will remain elevated. Contract pricing for truck are up 4%, with rail rates similarly on the rise. FTR expects the SCI to remain in the current negative range for the foreseeable future, as long as freight growth continues.

“Shippers will continue to be squeezed as we move into the holiday season,” says Eric Starks, president of FTR. “The capacity situation for trucking is still tight and is not expected to ease back any time soon. Also, the railroads continue to have service issues, and their ability to pick up a significant amount of extra freight is constrained at the moment. We don’t anticipate any increase in service levels from the railroads until well after the holidays are over.”

The lone bright spot, according to Starks, is that fuel surcharges passed on to shippers are droping rapidly as fuel process drop. “This is a welcome sight for shippers,” he observes, “as long as it does not telegraph a slowdown in economic activity that could hurt a shipper’s core business.”

About the Author

Dave Blanchard | Senior Director of Content

During his career Dave Blanchard has led the editorial management of many of Endeavor Business Media's best-known brands, including IndustryWeek, EHS Today, Material Handling & Logistics, Logistics Today, Supply Chain Technology News, and Business Finance. He also serves as senior content director of the annual Safety Leadership Conference. With over 30 years of B2B media experience, Dave literally wrote the book on supply chain management, Supply Chain Management Best Practices (John Wiley & Sons, 2021), which has been translated into several languages and is currently in its third edition. He is a frequent speaker and moderator at major trade shows and conferences, and has won numerous awards for writing and editing. He is a voting member of the jury of the Logistics Hall of Fame, and is a graduate of Northern Illinois University.

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