FTR’s Shippers Conditions Index (SCI) fell further in September to a reading of -8.2 from the -6.7 in August. Data from Truckstop.com shows underlying tightness in capacity that is steadily raising rates and some continued uptick from hurricane-impacted capacity utilization. The pressure from the hurricane demand will abate shortly, which will somewhat improve the environment for shippers improving the SCI reading, although it will stay in negative territory. However, if the economy remains strong, there is a downside risk that capacity and rates will be even more negatively impacted with a falling SCI measure.
Eric Starks, Chairman and CEO at FTR, comments, “Shipper pressure has been mounting since the middle of the summer. The lower SCI number validates those pressures and suggests that further rate increases are on their way. We have already seen the increase in spot rates, and are recently seeing contract rates being pushed higher. This is coming from increased freight demand, while real capacity continues to tighten. Another data point that validates the tight environment is showing up in demand for new trucks as orders for equipment has surged over the last 2 months as fleets look to expand their fleets. Given the current market conditions we would expect to see the SCI move lower once the October data is released suggesting additional pressure on shippers.”