Trucking Conditions Index from FTR reflects tight capacity and high rate environment

ccording 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.

By ·

The impact of very tight trucking capacity was evident in the most recent edition of the Trucking Conditions Index, according to the most recent edition of the Trucking Conditions Index (TCI), which was issued this week by freight transportation consultancy FTR.

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.

For December, the most recent month for which data is available, the TCI was 9.2, which was well ahead of November’s 5.48 and in line with October’s 9.48.

FTR said that December’s reading reflects a full capacity environment that is paced by ongoing strength in freight demand. Looking ahead, FTR said it expects the TCI to remain elevated and head higher in 2018, with trucking capacity “maxed out” and freight rates at their highest level in a number of years.

“Fleets have been running very efficiently the past few years, with capacity utilization in the high 90% range. Couple this efficiency with increases in freight volumes and productivity hits due to weather and regulations, and it’s no surprise to the industry that the end of 2017 and the beginning of 2018 have been good for carriers,” said FTR COO Jonathan Starks in a statement. “We are seeing robust orders for trucks and trailers, serious recruitment drives, and the type of rate increases which make these expenditures feasible. In terms of the overall economy and freight demand, we are looking at strong potential for further upside possibilities for carriers.”

The TCI's takeaways regarding rates are in in line with observations from Robert W. Baird & Co. analyst Ben Hartford.

Speaking at last month’s SMC3 Jump Start 2018 conference in Atlanta, Hartford said that expectations for carrier rate increases during 2018 were high, consistent with recent spot truck pricing data, adding that Baird continues to see gains of 5% and higher for contractual truckload pricing growth in 2018, with LTL and domestic intermodal trailing but also remaining on growth paths.

What’s more, Hartford referred to an SMC3 audience poll of roughly 90 attended at the event, which cited how "65% of respondents selected "carriers are looking for payback," while only 35% selected "carriers will approach rate negotiations on a rational basis."

A separate question posited "given the strength in spot demand and pricing, when do (you) expect some relief?", and two thirds of respondents indicated 2019 or later (with 41% indicating during 2019 and 25% indicating 2020 or later). 29% expect relief in 2H18, with only 5% expecting relief during 1H18. 


Subscribe to Modern Materials Handling Magazine!

Subscribe today. It's FREE!
Find out what the world’s most innovative companies are doing to improve productivity in their plants and distribution centers.
Start your FREE subscription today!

Article Topics

· All Topics
Latest Whitepaper
The Overlooked Competitive Advantage: Connected Teams
57% of surveyed manufacturers believe they could reduce downtime by 10-30% by unifying their workgroup communications. What does a minute of downtime cost you?
Download Today!
From the January 2018 Modern Materials Handling Issue
PFS built one of the largest and most automated AS/RS freezers in the world in Washington state. Next up is a new design for automation. Automated Storage/ Automated Retrieval System, Cold Storage.
Lift Truck Series Part 1: Lift truck technology connects pickers to productivity
Breaking Through On Yard Visibility
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
Emerging Technologies for Your Distribution Center
Come get an insider's view of the latest technologies for inside your Distribution Center. You'll learn which technologies are being piloted, which are having success and moving from concept to implementation and into production on the maturity scale, and what's coming on the horizon.
Register Today!
EDITORS' PICKS
Trinchero Family Estates: Pallet handling in the vineyard
The second-largest family-owned wine company in the world turns to automated pallet handling and...
System Report: Rocky Brands Sees the Light
Confronting an aging materials handling system and new channels of business with new customer...

Top 20 industrial lift truck suppliers, 2017
The top lift truck suppliers list is changing with industry acquisitions causing a dramatic...
Lodge Manufacturing: Distribution Cast in Iron
In a new facility, iPhones and a new WMS allowed cookware manufacturer Lodge to double its business...