FTR Trucking Conditions Index remains in familiar territory

Despite a sequential decline from August to September, trucking themes related to tightening capacity and pending regulations remained mostly intact, according to the most recent edition of the Trucking Conditions Index from freight transportation consultancy FTR.  

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 ten indicating that volumes, prices, and margin are in a good range for carriers.

For September, the most recent month for which data is available, the TCI fell to 5.47 compared to August’s 6.76. July came in at 5.99, and June was at 2.93, while May’s 1.69 was at its lowest level going back to 2011.

FTR explained that while the TCI tailed off, the index remains positive over all, reflecting the modest tightening in capacity, coupled with regulations set to take effect next year, with the combination expected to result in improved pricing and margins for carriers through the end of 2017 that is expected to see the TCI hit peak levels later this year or early next year.

“The presidential election results have created some uncertainty in the market, mainly due to the lack of political and legislative experience from President-elect Trump,” said FTR COO Jonathan Starks in a statement. “There are certainly several areas where the new administration could make an impact on the marketplace - with regulations being the chief area of presidential power in that regard. We will learn more in the upcoming weeks and months as the administration’s team is finalized and the legislative and regulatory agenda is cemented. I wouldn’t look for any significant impacts to the U.S. economy until relatively late in 2017. The U.S. economy should continue to grow - and trucking will grow slowly with it.”

What’s more, the freight environment remains in a pattern of largely flat growth, although there have been recent signs for optimism, including a better than expected third quarter GDP estimated approaching 3 percent, decent job growth figures, and signs of increased consumer spending.

But these alone have not been consistent enough to translate into sustained economic growth, coupled with excess trucking capacity still being hampered by elevated inventories, which have shown signs of heading down recently.