BLOOMINGTON, Ind.–FTR’s Shippers’ Conditions Index (SCI) for June, at -2.0, reflects soft market conditions which have slowed, for the time being, rate increases that negatively impact shipper costs. Slowing GDP growth and a change in growth towards services has dramatically softened freight markets for both truckload and rail. With freight growth slowing and fuel prices staying soft, it’s possible that the index could move into positive territory later this year, the Index said.
The Shippers’ Conditions Index is a compilation of factors affecting shippers’ transport environment. Any reading below zero indicates a less-than-ideal environment for shippers. Readings below -10 signal that conditions for shippers are approaching critical levels, based on available capacity and expected rates.
“Line-haul rates are but one aspect of a shippers overall logistics budget. However, it is one of the more variable elements and that makes it a very visible piece. This is easily seen in the wide swing in truckload spot prices over the last year. Data from loadboard Truckstop.com shows that rates were up as much as 20% during 2014, and now they are down nearly 15% in the middle of 2015. Big drops in fuel prices account for about half of the decline, and continued price drops at the pump indicate that it will persist for some time. Global pressures have risen of late and are a detriment to demand for both shippers and transportation companies. Export activity has weakened considerably, and Chinese issues have rattled stock markets both at home and around the globe. Concerns for a recession certainly increase any time you have a lot of volatility occurring in markets. Right now is no exception, although I still feel that the U.S. is a more isolated arena and should be able to withstand the current environment without major disruption to our domestic economy,” said Jonathan Starks, Director of Transportation Analysis at FTR.