Breaking a long-term decline, in a significant reversal the FTR Associates’ Shippers’ Condition Index (SCI) as reported in the firm’s June Shippers Update improved to a reading of -5.4 from -11.4 the prior month.
The healthier environment for shippers is due to a slowdown in freight demand growth, thanks to the current lull in economic activity as well as further delays announced in the implementation of new federal trucking regulations. The SCI sums up all market influences that affect shippers; a reading above zero suggests a favorable shipping environment, while a reading below zero is unfavorable.
Larry Gross, senior consultant for FTR, said, “The current ‘soft spot’ in the recovery is providing some breathing room for shippers as the growth in freight has slowed. At the same time, we have moved back our forecasts for regulation-based tightening of the supply of trucks, as the federal government has delayed the implementation of new driver regulations. This is a temporary respite in our view. The SCI will start to deteriorate once again as the economy begins to reaccelerate later this year. As the new trucking regulations begin to kick in, shipping costs will increase through 2012 with transport costs such as fuel, equipment, and labor rising faster than the general rate of inflation.”
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