US consultancy FTR announced North America’s Shippers Conditions Index for June has improved slightly from the previous month.
The improvement may be short lived, however, as FTR forecasts the index to fall back again in July and, moving forward through the end of the year, settling in a range similar to or lower than May.
“Both spot rates and contract rates to move freight are increasing in a full capacity environment, and that is not expected to change. As the fall shipping season surge comes to fruition, conditions for shippers will only deteriorate more,” said Jonathan Starks, FTR’s Director of Transportation Analysis.
“While the June Index moved in a positive way for shippers, it still remains quite negative and highlights that they are operating in a capacity constrained environment. To date, in this recovery, aside from the weather-plagued winter of 2014, freight growth has been both fairly stable and relatively modest.
“This has allowed fleets to operate with very little excess capacity and keep contract rates relatively low as they focused on base load contracts. This has moved much of the demand fluctuations to the spot market – in which price swings can be much more dramatic. Spot rates have started to show an early upward movement at the end of the summer season, highlighting potential capacity issues as we move into the fall freight shipping season. Contract rates will be moving up, but it will be wise to watch spot rate activity to see how demand and capacity are matching up.”
The Shippers Conditions Index is a compilation of factors affecting the shippers transport environment. Any reading below zero indicates a less-than-ideal environment for shippers. Readings below 10 signal that conditions for shippers are approaching critical levels, based on available capacity and expected rates.