FTR Trucking Conditions Index down sharply from April to May
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What a difference a month makes.
That was the main message in the most recent edition of the Trucking Conditions Index (TCI) from freight transportation forecasting consultancy FTR Associates.
The TCI, which reflects tightening conditions for hauling capacity and is comprised of various metrics, including capacity, fuel, bankruptcies, cost of capital, and freight, dipped 4.0 points from 9.1 in April to 5.1 in May, the most recent month for which data is available.
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 firm said that the May TCI represents its lowest level in six months and reflects soft pricing results for the first quarter of this year and the moderate levels of driver shortages.
“The weakening recovery is making itself felt in lackluster growth in truck freight demand,” said Larry Gross, FTR Senior Consultant, in a statement. “Although carriers have been very disciplined thus far during the recovery, choosing not to add capacity, the lack of freight volume growth is constraining the industry’s ability to raise rates. We still expect industry conditions to slowly improve from here as we progress into the second half of the year.”
Even though this edition of the TCI is based on May data, Gross said in an interview with LM that there is not a huge difference in market conditions between then and now, with anecdotal reports indicating there is very modest growth in demand due to the slowdown in the economy.
What’s more some of the federal regulatory actions—like HOS and CSA—that are anticipated to cause tightness in driver supply are getting delayed and moving more slowly than originally expected, which Gross said leaves carriers in not as strong a position to raise rates.
“That is the core issue, and there is a tailwind in the form of fuel prices, with truckers mostly insulated from the costs and benefits of that by the fuel surcharge mechanism,” he said. “The current pricing of fuel prices helps truckers even though the fuel surcharge goes down. It is a mixed bag.”
As for how trucking market conditions may shape up between now and through the end of October, which is commonly viewed as prime time for Peak Season, Gross said FTR would expect a gradual tightening in the coming weeks. But barring any unforeseen events like an uncontrolled financial meltdown in Europe or a trade issue with China, FTR would expect some slow improvement in the TCI and a slower tightening in the market.Logistics Management July 11, 2012
About the AuthorJeff Berman 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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