FTR’s Shippers Conditions Index fell sharply in January due to rising fuel costs and higher freight rates

FTR’s Shippers Conditions Index (SCI) fell sharply in January to -10.1 from the December reading of -6.9.  Rising fuel costs and higher freight rates resulted in difficult market conditions for shippers in January despite a slight relief in freight demand and utilization.  The near-term outlook is quite negative as the February forecast already presumes the toughest market conditions since March 2021. The war in Ukraine raises the odds that conditions will remain significantly negative for a longer term.

Todd Tranausky, vice president of rail and intermodal at FTR, commented, “Shippers should not expect relief in the next few months or quarters from what the pain they have experienced recently in higher rates and particularly fuel surcharges. The war in Eastern Europe increases uncertainty around demand and prices in the weeks and months ahead and provides little reason for optimism that conditions will improve meaningfully. It is nearly impossible to see a scenario whereby shippers experience neutral conditions before 2023 without a significant change in underlying economic and geopolitical conditions.”

The March issue of FTR’s Shippers Update, published March 7 provides a detailed analysis of the factors affecting the January Shippers Conditions Index and provides the forecast for this index through January of 2023. The March issue also includes commentary highlighting the potential risks to freight demand of recent sharp gains in retail inventories.

The Shippers Conditions Index tracks the changes representing four major conditions in the U.S. full-load freight market. These conditions are: freight demand, freight rates, fleet capacity, and fuel price. The individual metrics are combined into a single index that tracks the market conditions that influence the shippers’ freight transport environment. A positive score represents good, optimistic conditions. A negative score represents bad, pessimistic conditions. The index tells you the industry’s health at a glance.