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Expect Rate Hikes To Surge In Second-Half 2013

Posted: August 1, 2014

BLOOMINGTON, IN — The May results for FTR Associates’ Shippers Conditions Index (SCI) show that there has been little change from the previous month, however, FTR expects rates to accelerate in the second half of the year.

“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,” says Jonathan Starks, director of transportation analysis for FTR.

May’s SCI reading of -7.5 indicates a tight capacity with only modest rate increases from truckload carriers. Rates have continued to be relatively unchanged versus a year ago, thanks in part to lower fuel surcharges.

FTR is predicting rates to increase in the latter half of the year, alongside the new U.S. hours-of-service regulations, which will take some capacity out of the industry.

 “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,” says Starks. “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.”

The SCI takes in to account a variety of factors that affect shippers’ transport environment. Any number below zero is considered less-than-ideal, with anything below 10 meaning approaching critical levels based on available capacity and expected rates.

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