FTR reports market conditions remain strong for motor carriers
FTR's Trucking Conditions Index for January, the most recent month for which data is available, was 8.82 and is up 2.8 points from December, with FTR explaining that gain is indicative of what it described as belated improvement in truckload rates that started to take hold last July, when changes to driver Hours-of-Service (HOS) regulations commenced.
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Tight capacity appears to be paving the way for strong market conditions for motor carriers, according to the Trucking Conditions Index (TCI) recently released 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 ten indicating that volumes, prices, and margin are in a good range for carriers.
The TCI for January, the most recent month for which data is available, was 8.82 and is up 2.8 points from December, with FTR explaining that gain is indicative of what it described as belated improvement in truckload rates that started to take hold last July, when changes to driver Hours-of-Service (HOS) regulations commenced.
“While freight certainly took a hit to start 2014 numerous other indicators are positive for the industry and line up with our expectations for the remainder of the year,” said Jonathan Starks, FTR’s Director of Transportation Analysis, in a statement. “Namely, the capacity situation for trucking was highlighted when the severe weather hit and capacity shortages started occurring. These shortages illustrate that the industry has been operating with much less surge capacity available than in the past, and spot market pricing responded and has stayed elevated through much of February. If a late winter storm were to hit just as the spring shipping season heats up in March we could see another significant jump in TL pricing.”
While the calendar says that spring is nearly here, the harsh winter weather could possibly stick around longer, which could lead Starks’ prognosis to fruition.
And while the ongoing weather-induced tight capacity could continue to put pressure on rates, which would serve as an ongoing detriment for shippers, industry stakeholders note they may not have much of a choice until the weather clears.
Shifting freight to the rails, for example, might not be a way to alleviate things, as weather-related service disruptions for rolling stock have been an issue in recent months.
Weather-aside, the new HOS regulations continue to impact over all truck productivity, with production being impacted by anywhere from 2-4 percent, according to most industry estimates.
“Capacity is as tight as we have seen it in many years,” said Tom Nightingale, president, GENCO Transportation Logistics, in a recent interview. “While the weather has certainly been a major driver of the capacity shortage, it feels like volume increases are driving at least as much of the tightness. This is all being exacerbated by a tough driver recruitment market and carriers feeling the full impact of last year’s HOS (Hours-of-Service) rule changes.”
About the AuthorJeff Berman, Group News Editor Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. Contact Jeff Berman
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