FTR Associates’ Shippers Conditions Index for May was basically unchanged from the level of the last few months at a reading of negative 7.5.
The SCI level is indicative of tight capacity, but only modest rate hikes by truckload carriers, according to FTR. The company forecasted in acceleration in rates for the second half of the year, as the new hours of service regulations, that took effect on July 1, lower trucking capacity.
“The sluggish economy and freight environment that has persisted for nearly two years now has created an environment in which shippers have been able to secure low rate increases despite fleets operating with fairly small amounts of spare capacity,” said Jonathan Starks, director of transportation analysis for FTR, in a written statement. “The introduction of more restrictive hours of service regulations for drivers on July 1 means that the amount of excess capacity in the system has shrunk even more.”
“As long as freight levels continue to inch upward, truck rates are likely to begin a more significant pattern of increases,” Starks continued. “If nothing else, fleets will be looking to cover their increased operating costs for drivers, in addition to taking advantage of the reduction in spare capacity that generally drives upward movement in truck rates.”