FTR's June Shippers Conditions Index reflects unfavorable but stabilizing environment

FTR released its June Shippers Conditions Index (SCI) showing a significant improvement over the previous two months. The index improved from May by 10 points to -5.4, the least negative index reading since January. While the index remains in negative territory, market conditions in June were unfavorable for shippers though much less so than they have been for months. This improvement signals a shift from crisis mode to what FTR describes as a more manageable operational environment.

The improved reading masks an important distinction about what's actually happening in the market. The index improved sharply, but that really means that overall market conditions are deteriorating for shippers at a much slower rate. The one relative positive seemed to have been falling fuel costs. However, that factor very recently has stopped improving and could be reversing. Meanwhile, market conditions were technically less severe than in March and April, but they remained challenging for shippers, largely because of freight rates. Spot rates hit historic highs in early June before softening seasonally, but the underlying rate structure remains elevated.

For carriers, this period tells a starkly different story. FTR's Trucking Conditions Index for June eased to 17.1 from May's record 20.4 reading, it continued to reflect a very favorable market for carriers. Spot rates in July softened as seasonally expected even though fuel prices rose sharply. Even if spot rates have peaked, contract rates likely will continue to rise well into 2027. For owner-operators working off spot loads and brokers who got favorable contracts locked in during the hot market, this window remains profitable, but the underlying freight fundamentals are shifting.

Looking ahead, shippers are in a better position to address their challenges methodically rather than having to 'drink from a fire hose,' as the saying goes. But owner-operators and small fleets shouldn't mistake stabilization for softness. The market is expected to be favorable for carriers throughout the two-year forecast horizon, but the recovery appears to be stabilizing. This means spot rate volatility will likely continue, but carriers with fuel surcharges and those picking up longer-term contracts should maintain pricing leverage through the rest of the year.