By LM Staff · November 16, 2017
The new edition of the Trucking Conditions Index from freight transportation consultancy FTRreversed course, in the right direction, from August to September, the most recent month for which data is available.
The TCI reflects tightening conditions for hauling capacity and is comprised of various metrics, including capacity, fuel, bankruptcies, cost of capital and freight.
According to FTR, a TCI reading above zero represents an adequate trucking environment, with readings above 10 indicating that volumes, prices and margin are in a good range for carriers.
September’s reading of 3.5 was up more than 2 points compared to August’s 1.41.
While this most recent reading showed growth, it pales compared to June and July, which came in at 4.54 and 5.75, respectively, with May and June were each in the 7.0 range.
Looking ahead, FTR said that a coming spike in the TCI will be related to Hurricane recovery efforts, coupled with strong demand for truck freight expected to keep the TCI in positive territory through 2018.
What’s more, even though the economic recovery’s economic growth has been the weakest on record, FTR said trucking has grown at a better than 3% clip – consistent with stronger economics. And it added that if the economy maintains its current strength, FTR expects that the index has a good chance for upside potential in the coming months.
“The trucking market is showing multiple signs of strengthening,” said FTR COO Jonathan Starks in a statement. “From surging order activity for new class 8 trucks to spot market freight rates that hit 30% increases versus last year, trucking companies are displaying signs of improving conditions. Recent weakness in the TCI stems from 2 conditions that are not expected to last. First was the surge in diesel pricing that accompanied the Hurricanes. While diesel prices have not come back down, they have slowed their upward trajectory–stable fuel prices are a long-term benefit to trucking, and surges upward are difficult to deal with since truckers don’t get paid for that higher priced fuel until the next load or the next contract. Second, and more importantly, contract pricing has finally started to show signs of awakening following nearly 6 months of strong spot price increases and the weather-fueled surges of recent months. While we have seen a moderation in the spot market environment over the last month, rates continue to be up over 20%, and capacity continues to remain tight.”