FTR’s Shippers Conditions Index (SCI) for February declined from January to a -1.0 reading, as the short term positive impact from one-time adjustments for rapidly dropping diesel prices and reversal of the 2013 hours-of-service changes runs out. From here, the index is expected to deteriorate under pressures building from new regulations hitting the trucking sector along with continued freight growth and expected upward movement in energy prices.
Jonathan Starks, FTR’s director of transportation analysis, said: “February was a tough month to get a good reading on the state of the economy. From bad weather to port stoppages to weak economic data, it came as no surprise that the SCI remained close to a neutral reading for February. For shippers, spot market capacity has certainly eased from the very tight market in 2014, with Truckstop.com showing a 15% increase in available trucks in February versus last year. However, FTR estimates that the contract side of the business remains well above 95% utilization. While down from the extreme levels of last year, it is still strong enough to force shippers and carriers to deal with the coming regulatory tsunami. Also coming to an end is the rapid decline in fuel costs. Starting in March, shippers will once again be in parity with what truckers are paying and charging for fuel. Conditions for shippers will likely stay modestly negative for the balance of 2015--an improvement over the last couple of years. The big change to the operating environment comes in 2016 when numerous regulations in the pipeline start being implemented. If (and that’s a big if) the economy can keep growing in 2016 and 2017, the capacity problems of early 2014 will look small in comparison.”
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 February Shippers Conditions Index, along with additional commentary on slowing economic measures and how they may play out with regard to freight and trucking, are found in the April issue of FTR’s Shippers Update published April 10.