FTR data indicates shippers remain in a tight spot

Tough times continue to remain intact for shippers, based on the results of the most recent edition of the Shippers Conditions Index (SCI), which was released this week by freight transportation consultancy FTR.

FTR describes the SCI as an indicator that sums up all market influences that affect the transport environment for shippers, with a reading above zero being favorable and a reading below zero being unfavorable and a “less-than-ideal environment for shippers.”

For January, the most recent month for which data is available, the SCI reading was -11.1, which is down from December's -8.8 and November's -8.9.

FTR said the January reading points to the ongoing challenges shippers are up against, with the firm expecting what it expects to be a tough 2018 for both capacity and rates. And it added that rates are expected to expand annually in the second quarter prior to a modest decline over the second half of the year.

What's more, the firm said that full ELD compliance, coupled with the ongoing driver shortage, offers little optimism for shippers, adding that shippers need to address freight transportation productivity, and their role in improving it, to counter the inevitable rising transportation costs associated with the current environment.

“The relationship between carriers and shippers tends to swing on a pendulum - with freight demand high and capacity tight, carriers are benefiting,” said FTR COO Jonathan Starks in a statement. “Numerous companies are announcing that domestic freight costs are at record levels. Since carriers currently hold such a strong position, shippers need to be hyper-focused on their relationships with carriers.”

And Avery Vise, FTR Vice President of Trucking Research, noted that the firm is beginning to see the implementation, by both shippers and carriers, of the productivity enhancements that we have been expecting to happen.

“The elevated rate environment is not expected to be a short-lived event and continued progress will be necessary,” said Vise. “There seems to be no single solution, and we are seeing many different routes to addressing the tight capacity environment, from changing driver requirements to increased driving school enrollment to increasing detention payments.”

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