Fleet Management

FTR Shippers Condition Index Reflects Tighter Capacity, Higher Rates

November 09, 2011

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FTR Associates' Shippers Condition Index fell in September by 0.9 points from the previous month, signaling tightening trucking capacity.

The SCI, which fell to -4.7, sums up all market influences that affect shippers. A reading above zero suggests a favorable shipping environment, while a reading below zero is unfavorable. The SCI indicates that conditions have resumed deteriorating from the shipper's perspective after a period of relatively better conditions this summer. But the decline is relatively modest so far, and conditions are still significantly better than they were early in the year.

"With freight carriers maintaining tight discipline on capacity and pricing, even the recent very modest growth in the economy has been sufficient to drive increasing rates," explained Larry Gross, senior consultant for FTR.

Most critical for the 2012 outlook is the ultimate resolution of the pending Federal Motor Carrier Safety Administration ruling on changes in Hours of Service regulations for truck drivers, Gross said. The FMCSA has once again delayed the issuance of the revisions, but the new rule is in final review and should come out shortly.

"If the new rules contain the revisions previously discussed, and if the courts do not issue a stay as a result of the inevitable legal challenges, then shipping conditions will dramatically worsen in 2012 as a result of extremely tight trucking capacity. Rate escalation and actual trucking capacity shortfalls could be the result."

The index is part of FTR's November Shippers Update. FTR Associates, located in Nashville, Ind., has in the business of transportation forecasting for more than 20 years.

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