FTR’s Shippers Conditions Index takes a step back but is still positive

Freight transportation consultancy FTR reported this week that the most recent edition of the Shippers Conditions Index (SCI) remained in positive territory despite taking a step back.

FTR describes the SCI as an indicator that sums up all market influences that affect the transport environment for shippers, with a reading above zero being favorable and a reading below zero being unfavorable and a “less-than-ideal environment for shippers.”

For July, the most recent month for which data is available, the SCI fell to 4.3, down from June’s 8.8. FTR said that this reading reflects a mixed freight environment, with the industrial sector flat or worse. But it countered that consumer spending remains solid. The main driver for the sequential decline, it said, was firmer freight rates in July.

And it added that July’s SCI reading was more in line with both recent history and the near-term outlook, noting that June’s 8.8 reading marked the strongest one going back to early 2016 and is likely an “outlier in the current environment.

Looking ahead, FTR said it expects the SCI to remain in the mid-positive range akin to July over the course of the next year, with the caveat that any significant increase in fuel prices, due to the pending IMO 2020 mandate and other potential risks to diesel costs, may impact that forecast and make for a more negative outlook for shippers.

“Shippers will continue to benefit from a weaker freight environment through the next few months and into 2020, said Todd Tranausky, FTR vice president of intermodal and rail in a statement. “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.”