Shippers Conditions Index Improves, But Only Temporarily
December 19, 2012
FTR Associates' Shippers Conditions Index for October improved month-over-month by nearly two points to a reading of -5.0, but FTR analysts predict the pendulum will soon swing back toward the carriers' side of the equation.
FTR projections indicate that the current improvement will yield to a gradual deterioration in shipping conditions as 2012 ends and throughout 2013.
If the SCI worsens, as expected, this is actually good news for the trucking industry, as this means carriers have more leverage to raise rates.
FTR has been forecasting that the combination of new trucking regulations and slowly rising freight volumes will cause a tightening of capacity. Although the capacity situation is not expected to reach an acute phase, it will be enough to result in higher rates for shippers.
"Shippers need to be aware that the current relatively benign conditions are not expected to last," says Larry Gross, senior consultant for FTR. The fundamentals of our economy are improving and will continue to do so unless our government snatches defeat from the jaws of victory by failing to reach a fiscal cliff agreement in a timely fashion.
"Areas of strength include a recovering housing sector and low energy prices. Changes in trucking regulations are looming although court challenges may yet throw a monkey wrench into the proceedings, delaying implementation and the resulting tightening of capacity. But putting it all together, FTR feels the most likely outcome will be a more difficult scenario for shippers in 2013."