Shippers Condition Index up slightly

The monthly FTR Associates’ Shippers Condition Index (SCI) rose slightly in June to a reading of -3.1. The current index reading was published in the company’s August Shippers Update.

The SCI sums up all market influences that affect shippers. According to FTR, any reading below zero is considered unfavorable to the shipping environment.

In March, the index was reported at -11.4. With the continued rise in the SCI, FTR is reporting improving conditions for shippers as economic and freight growth slowed through late spring and early summer easing the strain on capacity and slowing the rise in rates.

However, according to FTR, the rate of improvement in the SCI has slowed each month and the company is projecting the index will fall again starting with the July reading as freight demand begins to accelerate. These conditions are expected to negatively impact shippers through the balance of the year.

“Given the recent drumbeat of negative economic reports it may seem counter-intuitive to be calling for rate increases going forward,” said Larry Gross, senior consultant. “But truckers have been reporting solid rate performance thus far this year even in the face of GDP growth of less than 1%. This indicates that freight demand and capacity are in balance. With truckers not adding capacity and barring an economic recession, we expect to see modest growth in the market as we enter the normal peak season which will keep pressure on the shipping environment. Of course we are dealing with more than the usual amount of uncertainty at the moment so we will be closely watching for signs of weakness in the coming months.”