BLOOMINGTON, Ind. — FTR’s Shippers Conditions Index (SCI) for July fell back from June’s 8.8 measure to a still-positive reading of 4.3.
The SCI reflects a mixed freight environment with the industrial sector flat or worse, but consumer spending is still healthy. Firmer freight rates in July contributed to the decline in the index.
While the July SCI was significantly lower than June, it is more in line with recent history and the near-term outlook, according to Todd Tranausky, vice president of rail and intermodal at FTR.
He said the June index, which was the strongest since early 2016, appears to be an outlier in the current environment.
FTR projects the SCI will remain in the mid-positive range similar to July for the next year. However, any significant increase in fuel prices due to IMO 2020 and other potential risks to diesel costs could affect that forecast and create a more negative situation for shippers.
“Shippers will continue to benefit from a weaker freight environment through the next few months and into 2020,” Tranausky said. “Rail carload volumes took a step down in recent weeks that should further improve rail service. Rail intermodal and truckload markets will remain tightly matched until at least the middle of 2020, giving some shippers modal choice.”
The September issue of FTR’s Shippers Update, published Sept 6, 2019, details the factors affecting the June Shippers Conditions Index. Also included in the September report is a forewarning from FTR about the possibility for slower growth ahead.
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.
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