2022 To Welcome Shippers With Tough Challenges

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  • FTR says road freight service will suffer over next several months, while project44 warns of empty shelves for holiday shoppers.
  • Shippers will likely face months of continued challenges in moving their inventory around the country despite a small improvement in July, according to a measure tracked by the freight transportation forecasting group FTR.

A recent news article published in the DC Velocity states that shipping forecasts see difficult conditions heading into 2022.

FTR’s Shippers Conditions Index (SCI)

FTR’s Shippers Conditions Index (SCI) for July stayed deep in negative territory at -8.07, showing a small improvement from its level of -12.0 in June, the Bloomington, Indiana-based firm said.

While that accomplishment marks the index’s best reading since the fourth quarter of 2020, that growth is so slow that it is forecast to improve into low negative territory heading into 2022.

Full-load freight market

The SCI number represents the conditions of four variables in the U.S. full-load freight market, including freight demand, freight rates, fleet capacity, and fuel price.

Combined into a single figure, the number represents good, optimistic conditions when positive and poor conditions when negative.

According to FTR, the July SCI rose a tick because of a tiny softening of freight volume alongside slightly less negative readings for freight rate and capacity utilization.

 “The Shippers Conditions Index improved slightly in July, but that improvement came off a low base,” Todd Tranausky, FTR’s vice president of rail and intermodal, said in a release. “Conditions are still tough for shippers and will likely remain difficult for some time to come. Strong capacity utilization will support higher rates even as service suffers over the next several months.”

Maritime shipping conditions are even worse

Compounding those hurdles on land, maritime shipping conditions are even worse, as port delays continue to worsen and carriers are charging more than ever to ship containers, according to supply chain visibility provider project44.

Those problems are caused by the one-two punch of a lack of capacity and pandemic conditions, and carriers are passing associated price increases on to shippers, setting the stage for holiday shortages and inflation, Chicago-based project44 said.

“If current circumstances hold, we’re going to see many more empty shelves heading into the holiday shopping season and beyond,” Adam Compain, project44’s senior vice president for data insights, said in a release.

Ocean carriers’ schedule reliability continues to decline

Under those conditions, ocean carriers’ schedule reliability continues to decline, with delays of up to 30 days on the worst-hit China-to-EU routes, and 21.94 days on the worst-hit China-to-U.S. West coast routes, the company said.

And there is no relief in sight: “There’s no quick fix here. Unless demand drops significantly after the holiday rush, this could be a multi-year problem,” Josh Brazil, vice president for data insights, said.

“Shippers can no longer absorb the costs. Sustained astronomical shipping rates coupled with a delayed supply are already causing inflationary pressures in the broader economy.”

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Source: DC Velocity

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