New-York-Stock-Exchange-Trackers

Supply Chain: Good Days Are Here at Last... But Not for Long

supply chain, shipping, Shippers Condition Index, FTR

For the moment at least, shippers are enjoying some of the best market conditions seen since 2010.
The supply chain community has enjoyed a tremendous sigh of relief as the Shippers Condition Index finally reached a positive reading.

The SCI – FTR's measurement of factors affecting the shippers transport environment – has been well below zero since 2010. But no more—the SCI score for January 2015 was 2.6.

That positive score reflects a one month reaction to fuel price reductions and adjustment for reversal of the 2013 Hours of Service changes, FTR hastens to point out. And the party could well be short-lived, as FTR anticipates that the SCI will fall back into neutral territory and deteriorate as the year progresses, impacted by building regulatory drag, continued freight growth, and upward fuel pricing that could be substantial by mid-year.

Another factor is the raised rates and delayed shipments in 2014 due to the weather-induced capacity crunch of the Polar Vortex. That led to rate increases of 20% and capacity tightness hitting unprecedented levels.

It's certainly a good thing that the market has removed several obstacles to improve the lot of shippers, but Jonathan Starks, FTR's director of transportation analysis, expects that the market "will quickly move back toward a negative environment as freight growth continues and regulations are enacted that make capacity tight again, moving base rates higher. There is also a strong potential for reversal of the recent reductions in fuel prices. All of these factors point toward a notable decline during the rest of 2015."

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