Today’s Pickup: Conditions for shippers worsen as rates rise, capacity shrinks

(Photo: Shutterstock)

(Photo: Shutterstock)

Good day,

FTR’s Shippers Conditions Index (SCI) took a tumble in August, the firm said, dropping to a negative 6.7 reading. Most of the decline was due to the short-term fuel cost increases because of disruptions due to Hurricane Harvey.

Additionally, the SCI has been trending more negative due to increased logistics costs for shippers that are expected to continue into 2018 and full capacity utilization that has driven up spot prices. Contract pricing is expected to follow suit, FTR said.

The Shippers Conditions Index tracks the changes representing four major conditions in the U.S. full-load freight market. These conditions are: freight demand, freight rates, fleet capacity, and fuel price.

“Shippers are in a tough position right now. We have known for some time that the trucking industry has been operating with very little excess capacity; however, the weak pricing environment masked that phenomenon for the last year,” said Jonathan Starks, COO of FTR. “Hurricanes Harvey and Irma exposed shippers to this new reality. There just wasn’t enough excess capacity to deal with spikes, and the result was a significant spot market pricing gain that persisted through early October. Spot rates have begun to normalize, but that still puts rates at +20% compared to last year. When you couple the Hurricane impacts with increased freight demand and the fast approaching ELD implementation, there’s a real fear that loads won’t get delivered. This is already beginning to show up in the contract markets. Spot prices were the canary in the coal mine - contract pricing is likely to show significant gains through most of 2018.”

Did you know?

The American candy industry sells $2 billion of candy on Halloween, equivalent to about 90 million pounds of chocolate. Each year, the industry sells 600 million pounds of candy, enough to fill 15,000 53-foot trailers.

Quotable:

“The Peterbilt brand is built on loyalty; it is the lifeblood of our business. We want to reward that loyalty and the one millionth truck milestone will be the perfect opportunity. We have the best and most loyal customers and fans in the industry, and I’m excited to see and hear their stories.”

- Kyle Quinn, Peterbilt general manager, on the company’s new promotion to find five “SuperFans” of the brand

In other news:

Race to electric vehicles drives new metals futures market

The London Metal Exchange plans to develop a futures market for the investment and risk management of battery metals. (Wall Street Journal)

Consumer spending jumps

Consumer spending rose in September at its fastest pace in 8 years while at the same time Americans are saving less, according to the latest data. (Wall Street Journal)

Best Buy tabs 3PL Geodis for free shipping program

Best Buy has teamed with Geodis, which will handle the company’s free holiday shipping program, it announced. (Star Tribune)

2018 carrier registration fees delayed again

The Unified Carrier Registration board has delay 2018 carrier registration fees until 90 days following FMCSA publishing a final rule setting the fee schedule for 2018, which has yet to be done. (CCJ)

IoT creating more visibility in complex supply chains

The Internet of Things is opening up new doors to cargo visibility in transit, leading to less loss within complex supply chains. (Inbound Logistics)

Final Thoughts

Best Buy and Target are both offering free shipping this holiday season and UPS has announced that will it streamline the process for returning goods ordered online this year. With an expected strong holiday shopping season, carriers, particularly UPS, FedEx and USPS, will be busy moving goods this year.

Hammer down everyone!

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