FTR’s Shippers Conditions Index (SCI) for August, at a reading of -6.5, remains at a sustained low level reflective of persistent capacity shortages and rising rates. Costs to ship goods in the current freight environment are expected to remain elevated.
Truck rates have moved firmly upward with 4% plus gains in contract pricing. Rail rates are rising as well with strong demand for their services coupled with capacity shortages due to service issues. The Shippers Conditions Index is expected to remain in the current range for the foreseeable future, as long as freight growth continues.
Eric Starks, FTR’s President, said: “Shippers will continue to be squeezed as we move into the holiday season. The capacity situation for trucking is still tight and is not expected to ease back any time soon. Also, the railroads continue to have service issues, and their ability to pick up a significant amount of extra freight is constrained at the moment. We don’t anticipate any increase in service levels from the railroads until well after the holidays are over. The only positive that we see in the short-term is that fuel surcharges passed on to shippers are dropping rapidly as fuel prices drop. This is a welcome sight for shippers, as long as it does not telegraph a slowdown in economic activity that could hurt a shipper’s core business.”
The Shippers Conditions Index is a compilation of factors affecting the shippers transport environment. Any reading below zero indicates a less-than-ideal environment for shippers. Readings below 10 signal that conditions for shippers are approaching critical levels, based on available capacity and expected rates.
Details of the factors affecting the Shippers Conditions Index, along with additional commentary discussing the market discrimination between easy and hard to move freight, are found in the October issue of FTR’s Shippers Update published October 8, 2014. For more information about how to subscribe to FTR’s Shippers Update, send an e-mail to [email protected].