CSCMP's Supply Chain Quarterly
March 28, 2020
Forward Thinking

Monthly shippers index shows relief from high freight rates

FTR's November market measure hits first positive mark in over two years.

After months of paying record-high trucking prices in a tight capacity market, shippers are finally beginning to see relief thanks to softening rates and slumping fuel prices, according to the latest monthly index of market conditions generated by the industry consulting firm FTR.

Bloomington, Ind.-based FTR's Shippers Conditions Index (SCI) for November moved from negative territory to a positive reading of 0.1, marking the ranking's first positive reading in more than two years and its best since August of 2016.

Shippers Conditions Index

FTR expects those condition to endure, predicting that the SCI will stay within a range close to neutral throughout 2019, and could even move into more positive territory if freight rates continue to be pushed lower by forces such as weakening demand, strong truck buying, and improved driver hiring, the firm said.

"Conditions have improved noticeably for shippers in the last few months," Todd Tranausky, vice president of rail and intermodal at FTR, said in a statement. "The prospect of sustained lower fuel prices, increasing capacity in the truck and rail sectors, and the first signs of a turn in rail service raise the prospect of a much better 2019 than shippers expected during much of 2018."

The news does not necessarily fortell worsening conditions for carriers, however. Thanks to the same slump in fuel prices, FTR's Trucking Conditions Index (TCI) also rebounded in November after plunging for the previous three months.

FTR calculates its SCI by tracking four major variables in the U.S. full-load freight market, including freight demand, freight rates, fleet capacity, and fuel price.The firm then combines those individual metrics into a single index that measures changes in shippers' freight transport environment. A positive score represents good, optimistic conditions, while a negative score represents bad, pessimistic conditions.

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