FTR: Shippers Conditions Index continues to fall

Truck rates, both spot and contract segments, have increased for shippers as an immediate reflection of the tight truck market, according to freight transportation intelligence firm FTR.    The Shippers Conditions Index, which tracks the changes in major conditions for the U.S. full-truckload freight market, continued to fall in October, reaching a “problematic” reading of -9.6, freight transportation intelligence firm FTR said Dec. 21.
   “Truck rates, both spot and contract segments, have increased for shippers. This is an immediate reflection of the tight truck market,” FTR explained in its latest report. “After the holiday blitz, tight capacity should ease somewhat in Q1 2018, as it typically does, before peaking again in the Spring.”
   FTR also warns, however, that there is additional downside risk to the conditions index for early 2018 if contract rates jump substantially or if electronic logging device (ELD) effects are more pronounced than expected.
   The four conditions that the Shippers Conditions Index tracks are freight demand, freight rates, fleet capacity and fuel price. 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.
   According to FTR, the index tells the industry’s health at a glance. A reading well below zero on the FTR Trucking Conditions Index warns of a problem, while readings high above zero indicate opportunity. Readings near zero are consistent with a neutral operating environment. Double digit readings – either positive or negative – are warning signs for significant operating changes.
   “Conditions for trucking and shipping have been diverging dramatically since the hurricanes hit in August. The hurricanes highlighted the lack of extra capacity available in the system,” FTR Chairman and CEO Eric Starks explained. “This has been followed by continued strong freight conditions in Q3 and into Q4.”
   “Shippers are really feeling the pinch right now, and there is fear that the ELD mandate will impact capacity in the spring,” Starks continued. “We have essentially hit the 100 percent capacity mark – there is little, if any excess truck capacity. Add in regulations, continued freight growth, or winter storms and we could be pushing that above 100 percent. That would leave shippers scrambling to get loads delivered. And that means paying premium rates for those deliveries. It may be a tough first half of 2018 for shippers.”