According to the freight transportation forecaster, lower fuel costs had a positive impact on the index.
FTR’s Shippers Conditions Index increased to a reading of -0.6 in December 2014, according to a statement from the company. The SCI compiles numerous factors affecting the shipping environment, and any reading below zero indicates a “less-than-ideal” environment for shippers.
FTR attributed the increase in the SCI primarily to the swift decline in the price of diesel fuel and positive capacity impacts from the reversal of certain Hours of Service rules.
The company cautioned it expects the conditions for shippers to deteriorate in 2015, due to pressure from increased regulatory drag and decreased capacity due to freight growth. Continued low fuel costs, however, could mitigate degree to which the SCI declines, FTR said.
“For those who are focused on the bottom line, the recent news has been very favorable,” Jonathan Starks, FTR’s Director of Transportation Analysis, said of the results. “For those looking down the road, there are still plenty of obstacles to prepare for. With fuel costs dropping rapidly in December and on into January, those financial tailwinds benefitted both carriers and shippers. As diesel prices continue to stabilize, as they have over the last few weeks, those tailwinds will quickly abate.
“After seeing total transport costs rise 2-3 percent throughout 2014, it is expected that costs will actually be below year ago levels during the first quarter of 2015, with that trend continuing for most of the year,” Starks added. “The flipside is that fleets are still pushing for strong base rate increases as their costs outside of fuel continue to be higher. Successful shippers will be focused on total landed cost, base rate increases, and securing capacity. Focusing on just one will leave you exposed to either higher than necessary costs due to high rates in a softening economy, or a lack of capacity in an expanding marketplace. In addition, shippers need to be aware of an unusually high level of uncertainty surrounding the energy market – a market already prone to extreme volatility.”
FTR Shippers Conditions Index shows marked improvement in December
