FTR’s Shippers Conditions Index (SCI) improved slightly in November to a reading of 1.4. However, this reading does not promise a positive outlook for shippers in 2017. FTR is forecasting steadily-deteriorating conditions for shippers through the year, as capacity tightens in reaction to stronger demand and the Electronic Logging Device (ELD) mandate. This (2017) will be a year of upside risks to truckload rates because of a tightened market, possible oil price inflation, and the chance of general inflation.
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.
Larry Gross, Partner and Senior Consultant at FTR, comments, “Although many shippers are saying, ‘We will believe it when we see it,’ our thesis that truck capacity will tighten significantly over the course of 2017 remains intact. Some may believe that the course of this mainly regulatory-driven event will be altered by the Trump administration, but our expectation is that the key change, namely the mandate for ELDs, will take effect in December as planned. This will cause substantial deterioration in the SI over the course of this year. While the pace and even the magnitude of the deterioration is still somewhat uncertain, shippers would be wise to lay in contingency plans for dealing with this significant event.”