FTR’s Trucking Conditions Index is flat sequentially but remains positive

The Trucking Conditions Index (TCI) issued this week from freight transportation consultancy FTR was essentially flat from April to May, 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.

The May TCI reading of 7.01 was in line with April’s 7.03, which posted a more than 4 percent gain over April.

FTR said that the spot rate market serves as a strong indicator that conditions for trucking companies are trending up with active truck utilization at just below 100 percent, adding that spot market volumes and pricing have been up annually for several months, although contract market prices are still weak, before fuel adjustments. 

It also noted that the freight environment in 2017 remains strong, although economic conditions are fluctuating enough that freight growth could weaken.  If growth does slow, that may mitigate the potential for critical capacity issues with the onset of ELD implementation at the end of the year.

“We are now at the beginning of the third quarter of 2017, and spot market pricing is showing solid double-digit increases over last year. It is becoming increasingly clear that the weak pricing in the contract segment cannot be sustained for much longer,” said FTR COO Jonathan Starks in a statement. “In reviewing data from the publicly-traded carriers’ first quarter reports, we have seen that there was no notable reduction in the carriers’ underlying costs. That means that rate increases will need to be forthcoming or margin compression will quickly impact their bottom line. The wildcard continues to be the ELD implementation at the end of this year. Capacity has already tightened, and the market will tighten further as full ELD implementation occurs.”