Winter of Discontent Could Become a Spring of Discontent for Shippers

Spring may only be a couple weeks away, but the interminable winter continues to be a factor in keeping the Shippers Condition Index (SCI) deeply entrenched in negative figures, according to analysis from transportation consultants FTR. For the month of December 2013, the SCI came in at –6.9, down nearly a full point from the –6.0 score in the previous month.

It’s a case of maybe/maybe not whether the SCI will improve significantly in 2014. While FTR expects a modest bump in the first quarter due to moderating regulatory pressure, the impact of the “polar vortex” and other weather-related supply chain disruptions, as well as the upcoming spring shipping season, could have a detrimental effect on trucking capacity, which could drop the SCI score even lower. As FTR explains, an SCI score below zero indicates a less-than-ideal environment for shippers, and scores at –10 or worse are a warning signal that conditions for shippers are approaching critical levels, based on available capacity and expected rates.

“After seeing decent economic growth to end 2013, 2014 has started off by taking a few blows,” observes Jonathan Starks, FTR’s director of transportation analysis. “First came the severe winter weather that put a significant cramp on both transport capacity and on production days for much of the U.S. This is likely to be a short-term impact as we get past the worst of the weather woes, but it does highlight the fact that there is very little excess capacity in the truck markets. We will know very shortly when the spring shipping season starts if it will be a bigger than expected issue.”

FTR’s best estimate, Stark says, is that shippers will be able to skirt any significant issues. “However, if the economy—especially manufacturing—shows any sort of hot spell during the year, there is a real likelihood that capacity will be insufficient for many shippers and competition for truckers (aka pricing) will rise rapidly.”