FTR cites flat trucking conditions with an eye on growth as year goes on

Flat conditions were the theme of the recent edition of the “Trucking Conditions Index” (TCI) issued by 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 10 indicating that volumes, prices and margin are in a good range for carriers.

For January, the most recent month for which data is available, the TCI came in at 2.7, which was in line with December’s 2.9 and down from November’s 4.38 and October’s 4.58. As was the case in December, the numbers from January reflect what FTR described as a low point for trucking conditions in advance of “an expected bounce as 2017 progresses.” The consultancy added that while the industry feels positive following the election, there are risks related to various economic proposals currently being considered by the new administration and Congress.

“It’s looking like 2017 will be a better year for the trucking industry,” said FTR COO Jonathan Starks. “This late recovery is consumer driven, which is relatively light on increasing freight demand, but we will see modest growth. More importantly, the industry is really beginning to face up to the costs and changes from ELD implementation.”

Starks said that we should expect a productivity and capacity hit to the industry, though the effects will be felt differently, with early adopters ahead of the curve. “One of the big issues we expect companies to continue to struggle with is the driver situation, with the number of new hires not keeping pace with overall demand for drivers,” he said.

If capacity doesn’t meet demand, then truckers will be able to raise prices. However, FTR does not expect to see that make an impact until late 2017, or into 2018. “We’re also closely tracking government policies and actions,” said Starks. “The main concern continues to be the possibility of trade wars, which could have immediate and detrimental effects on freight transportation.”

According to FTR, the ELD implementation scheduled for December could be markedly affected should the White House or courts significantly curtail or remove it, although the consultancy noted that should not be the case, given the long-standing bi-partisan support for transportation safety regulations.

According to Starks, FTR will closely monitor how small carriers begin to implement ELD into their operations over the next nine months to 12 months, and how it is likely to affect changes in carrier capacity and rates.

“Even though the market outlook is showing signs of optimism, the freight environment remains in a pattern of largely flat growth, including fluctuating GDP, decent job growth figures and signs of increased consumer spending,” added Starks.