FTR’s Shippers Conditions Index (SCI) for March was basically unchanged from February at a reading of -8.7, reflecting extremely tight capacity available to haul goods.
FTR currently expects the tight environment for shippers to moderate slightly in the coming months unless freight growth picks up as a result of a strengthening economy. With any additional improvement in freight tonnage, capacity could hit a critical stage forcing shippers to incur added purchased transportation costs.
Jonathan Starks, FTR’s Director of Transportation Analysis, commented, “Shippers learned that it doesn’t take much for a market that is operating with slim excess capacity to jump into the driver’s seat for rate increases. The strong spot market rate increases seen during January, February, and March highlighted how quickly the environment can change on them. Just one year ago, several industry sources were showing that general rate increases were actually below year-ago levels; shippers were getting rate reductions! A fairly static economy allowed that to take place, but the introduction of new Hours-of-Service (HOS) rules for drivers back in July 2013 changed that.
“Add in the potential for further economic acceleration in 2014 and we find it very unlikely that shippers will be able to get the rate reductions that they achieved last year. FTR expects to see general rate increases of between 4-5% for the year for truckload with national rate figures hitting 6% or higher versus last year during the middle of 2014.”
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 March Shippers Conditions Index along with additional commentary covering the impact of the overall economy and how it affects trucking are found in the May issue of FTR’s Shippers Update published May 9. For more information about how to subscribe to the Shippers Update, send an e-mail to [email protected] or call 888-988-1699 ext. 1.