April 23, 2013
FTR Associates’ Shippers Conditions Index (SCI) for February fell more than two points following a similar decline in January. The current reading of -9.5 reflects an expectation for increasingly difficult conditions for shippers as 2013 progresses.
The SCI is forecast to be bumpy over the next few months with further deterioration coming in the second half of the year.
The introduction of the new Hours of Service rule in July will be the next step in what FTR Associates expects to be the largest wave of trucking safety regulations in history. A cumulative effect of these regulations will be a reduction in driver productivity, resulting in a substantial tightening of already tight truck capacity.
FTR predicts rate acceleration, which will increase shipping costs as the effects of H.O.S. play out. The Shippers Conditions Index is a compilation of factors affecting 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 are found in the April issue of FTR’s Shippers Update published April 10.
Lawrence Gross, Senior Consultant for FTR commented “Although substantial uncertainty exists with regard to the near-term path of the economy, shippers need to be prepared for a difficult second half of the year. If the current path of slow economic growth remains intact and the courts do not delay the implementation of the new Hours of Service framework (a development we view as increasingly unlikely), then the stage will be set for a significant tightening of truck capacity, resulting in reduced service levels and higher rates. While the situation is similar in some respects to the last such occurrence in 2004, there is one important difference. While 2004 was a relatively short-term blip, we believe that 2013 will be the door-opener for a prolonged period of difficulties that could last several years”.
Commentary included in the current issue of the Shippers Update discusses the factors that could disrupt the current stable truck environment either positively or negatively. For more information about how to subscribe to the Shippers Update, send an e-mail to firstname.lastname@example.org or call 888-988-1699 ext. 1.