The Shippers Conditions Index reading from FTR fell further into double-digit negative territory in April to -13.4, signifying that there has not been capacity or rate relief for shippers in the current strong freight environment.
April may be the lowest point in this cycle as conditions likely will not get significantly worse for shippers over the balance of the year. Overall year over year rate growth is close to near-term peak. Shippers could see some stabilization in 2019 as more capacity comes online. However, there is no expectation for lower rates on an absolute basis until at least late 2019. Total shipping costs, with transportation the largest share, are forecast to rise an estimated 12% year over year in 2018 with another 5% increase expected in 2019.
Jonathan Starks, Chief Operating Officer at FTR, commented, “Truckstop.com’s Market Demand Index for the past four weeks remains nearly double 2017. The spot market is producing record rates every few weeks, though this trend will soon hit its peak.”
Todd Tranausky, senior transportation analyst at FTR, commented, “Shippers facing significant increases in rates for truck and rail intermodal movements have not yet seen relief. However, record truck orders should begin hitting the market in the second half of the year, and we are closely watching the driver situation, which will determine if shippers see improvements as the trucks become available.”
The Shippers Conditions Index tracks the changes representing four major conditions in the U.S. full-load freight market. These conditions are: freight demand, freight rates, fleet capacity, and fuel price. The individual metrics are combined into a single index that tracks the market conditions that influence the shippers’ freight transport environment. A positive score represents good, optimistic conditions. A negative score represents bad, pessimistic conditions. The index tells you the industry’s health at a glance.
In life, running a fever is an indication of a health problem. It may not tell you exactly what’s wrong, but it alerts you to look deeper. Similarly, a reading well below zero on the FTR Trucking Conditions Index warns you of a problem…and readings high above zero spell opportunity. Readings near zero are consistent with a neutral operating environment. Double-digit readings (both up or down) are warning signs for significant operating changes.
