Contract pricing, which has affected second-quarter earnings for a number of 3PLs, remains weak according to the latest data from FTR.
The firm’s Shippers Conditions Index (SCI) for May improved from the previous month to a reading of -1.9. “The benign reading is a reflection of only moderately favorable truck freight growth and continued weak contract pricing,” the firm said. “Spot market pricing has been rising [year-over-year] for several months. The Shippers Conditions Index is expected to have dynamic swings over the next year with shifts in overall capacity utilization and pricing taking effect as freight demand and regulations alter the landscape to differing degrees.”
FTR said indications are tighter capacity as 2018 begins but an easing of that capacity in early 2019 as regulatory drag slows.
“Shippers conditions continue to be mild,” said Jonathan Starks, COO. “This is in part because the economy hasn’t received the boost from the new Administration which many were hoping for. We are back at the status quo, with moderate growth in both the overall economy and truck freight. Contract pricing remains relatively favorable for shippers. It is only in the spot market, which continues to show strong results on both demand and rates, that we see the signs of changing conditions. We continue to expect implementation of ELDs, coupled with moderate increases in freight, to make for a more fraught environment for shippers. The closer we get to cresting 100% capacity utilization, the more worrisome the problem becomes.”
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. FTR explained that the individual metrics are combined into a single index that tracks the market conditions that influence the shippers’ freight transport environment. A positive score represents good, optimistic conditions. A negative score represents bad, pessimistic conditions.
Did you know?
It is believed that more than 60% of truck drivers own pets, with 40% of those traveling regularly with their pets.
“We need to really have a robust infrastructure plan. I’m not talking $1 trillion. I’m talking $3- to $4 trillion; really rebuild America. Really invest in the future.”
– Rep. Joseph Crowley (D-N.Y.) on MSNBC’s “Morning Joe.”
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Contract pricing has not been rising even though spot rates have. That has created a weak environment for contract rates, FTR said, although “dynamic swings” in the market are expected going forward.
Hammer down everyone!