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Wednesday, February 24, 2021

Rates and Capacity Likely To Get Tough For Shippers


Rates and Capacity Likely To Get Tough For Shippers

According to the Shippers Conditions Index compiled every month by transportation forecaster FTR, the environment for shippers is currently neutral but rate and capacity trouble is likely coming later in the year.

It is possible that Trump’s position on deregulation could mediate capacity concerns, especially if the electronic logging device mandate is altered to be more friendly to trucking companies and owner-operators. However, the administration is too new to know how things will play out.

The most recent SCI score is 1.9. Any score above zero is considered positive.

“Freight markets are currently operating at a relatively optimal level, with plenty of capacity to carry small increases in freight levels,” says Jonathan Starks, FTR’s chief operating officer.

“This continues to give transportation managers the opportunity to focus on negotiating the best rates. However, the shipping environment is approaching a transitional time, with the potential for significant capacity shortages by the end of the year.”

Starks cautions shippers to “keep an eye on how your negotiated contracts would be impacted by a severe capacity shortage. It may be wise for transportation managers to begin thinking about securing capacity, rather than focused on a purely rate-based negotiation.”