FTR’s Shippers Conditions Index (SCI) for August moved marginally up from July to a low positive reading of 1.1 — a rate that cannot be maintained, according to the trucking industry analysts.
That’s because shipping rates are expected to increase as available capacity is negatively affected by improved economic conditions and new regulatory drag affecting the trucking industry next year. The current wave of new regulations will continue through 2019, perhaps driving the SCI to new lows.
“Shippers are still able to take advantage of a moderately loose trucking environment,” said Jonathan Starks, chief operating officer at FTR. “This is largely due to the continued weakness in economic and freight conditions, especially in manufacturing and mining.
“In addition, shippers continue to benefit from the fuel environment, which has remained subdued, helping maintain cost reductions. Earlier this year, a spike in fuel prices seemed a distinct possibility. Now, a stable pricing environment seems the mostly likely scenario. That means that costs won’t fall significantly, but neither should fuel costs surge higher.
Starks said, “This makes driver wages one of the key items to understand going into 2017. Shippers that understand how to best utilize a driver’s time will be able to take significant advantage of that process to help drive better rates during a time in which the market may once again see 2014-like surges in prices.”
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 minus 10 signal conditions for shippers are approaching critical levels, based on available capacity and expected costs.