FTR: Shippers Conditions Index rises to ‘near neutral’ reading in June

The index is expected to remain neutral for rest of 2017, with the New Year bringing tightened capacity due to slow contract pricing increases and weakening regulatory environment, according to freight transportation analyst FTR.

   Freight transportation analyst FTR’s Shippers Conditions Index (SCI) improved from a reading of -1.9 in May to a reading of -0.7 in June.
   The month’s “near neutral” reading has prompted FTR analysts to predict a fairly moderate index for the rest of the year due to slow contract pricing increases and modest weakening of the regulatory environment.
   “Weak contract pricing is helping to keep the SCI in relatively neutral conditions. However, spot market pricing is approaching 20 percent y/y increases, and contract increases are only a short time from occurring,” said Jonathan Starks, ceo at FTR. “More importantly, Hurricane Harvey’s impacts on Texas and other gulf region states is strong enough to affect nearly 10 percent of the trucking market. That could serve as a catalyst for further capacity constraints and stronger rates as we head into the fall shipping season.”
  Despite the neutral prediction, index data points to slower growing economy, including slower freight growth, for the rest of 2017. As a result, capacity may still tighten by 2018, said FTR. 
   “In addition, the Electronic Logging Device (ELD) scheduled for December will maintain pressure on truck capacity as we head into 2018. The recent decision from the Commercial Vehicle Safety Alliance (CVSA) to delay full penalties for ELD compliance until April 2018 does reduce some of the near-term pressure, but the overall picture remains the same – trucking capacity is tightening, and rates are moving up,” said Starks.   
   The Shippers Conditions Index tracks the changes representing four major conditions – freight demand, freight rates, fleet capacity, and fuel price – in the U.S. full-load freight market.The individual metrics are combined into a single index that tracks the market conditions that influence the shippers’ freight transport environment. Any reading below zero indicates a less-than-ideal environment for shippers.