FTR Shippers Conditions Index points to still difficult market environment for shippers

In the most recent edition of the Shippers Conditions Index (SCI) from freight transportation consultancy FTR, “an unfavorable environment for shippers” remains fully intact.

FTR describes the SCI as an indicator that sums up all market influences that affect the transport environment for shippers, with a reading above zero being favorable and a reading below zero being unfavorable and a “less-than-ideal environment for shippers.”

For February, the most recent month for which data is available, the SCI reading came in at -11.1, matching January’s reading, which is down from December’s -8.8 and November’s -8.9.

Reasons cited by FTR for the difficult market shippers are dealing with included rising regulatory pressures, coupled with the capacity required for a “hot” freight market slow to increase in the first quarter, which subsequently added pressure on rates. The firm added that first quarter freight growth usually softens after a strong holiday season, but that has not been the case in 2018. 

And the FTR truck loadings index is expected to increase 4%-to-6% annually into 2019. What’s more, FTR said a continued capacity crunch in the truckload segment could “result in bleed-over of freight volume to LTL which would further increase shippers’ costs.” 

FTR COO Jonathan Starks said in a statement that shippers remain in the throes of a pro-carrier environment.

“Every major indicator of demand—manufacturing, payroll employment, retail sales, housing construction—is at least at the strongest level since the Great Recession,” said explained. “Unemployment is at a 17 year low, and the driver shortage continues to create capacity constraints. Rates on the spot market continue to remain elevated, and we don’t expect to see any significant downward rate pressure - whether spot or contract - until at least 2019. Shippers should not expect to get near-term relief from spot rates that are at or near record levels. Securing capacity at a reasonably higher price remains the key challenge for shippers.”

On the intermodal side, FTR Senior Research Analyst Todd Tranausky noted that intermodal rates are expected expected to follow truck rates higher and grow at more than 5% compared with the 2017 period through the balance of the year.

“The next few months will see rates grow even faster, leaving shippers paying more to move their goods in a tight freight market,” he said.