FTR’s Shippers Conditions Index (SCI) moved back into negative territory, falling three points from August to a -2.4 reading in September. The August positive reading was not expected to last; and, in September, the slow but steady build in regulatory drag moved the index back into negative territory that will not reach its nadir until late 2017 or early 2018. New regulations are beginning to tighten capacity and, consequently, truck rates are turning upward making shipping costs, including spot rates, higher.
The SCI 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 conditions for shippers are approaching critical levels, based on available capacity and expected costs.
Eric Starks, Chairman and CEO at FTR, comments, “While the Shippers Condition Index moved into negative territory, we are not seeing any material changes to shippers at the moment. There is still plenty of truck & rail capacity, and rates remain stable. We don’t anticipate any ‘real’ changes for shippers until late in Q1 or Q2 of next year. The shipping season is winding down, and demand for shipping will be in a seasonally soft period for the next few months. One item that we are keenly focused on is the implementation of Electronic Logging Devices by the trucking industry over the next year. If regulatory changes delay this, then it would not tighten truck capacity in the second half of next year as is currently anticipated. Only time will tell.”