FTR Trucking Conditions Index falls to lowest level since 2011

A new low, reflecting ongoing challenges in the trucking sector, was reached in the most recent edition of the Trucking Conditions Index (TCI) from freight transportation consulting firm 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.

For May, the most recent month for which data is available, the TCI sank to its lowest level since 2011, coming in at 1.69, which is nearly 5 points below April’s 6.2. In March, the TCI was 4.22, which marked an almost 50 percent decline compared to February and was the lowest TCI reading since 2011 at that time.

FTR cited factors like lower freight rates and capacity utilization falling below 95 percent as factors for the low TCI reading.

But it added there is room for improvement going forward, should there be a reinstatement of the 34-hour restart for motor carriers Hours-of-Service (HOS), adding that should a revision of the regulation take effect, it could tighten capacity enough to move pricing, with the TCI currently forecasted to increase into the mid-single digits later in 2016. The firm said this reflects weak economics meshing with the expected regulatory drag that will neutralize both positive and negative factors impacting the market. 

“One of the struggles right now is to bridge the gap between what the economic data is telling us and what the anecdotal evidence from carriers is telling us,” said FTR COO Jonathan Starks in a statement. “Part of it has to do with simply how the industry participants feel relative to 2014 and 2015. The market was way up in 2014. Conditions were ideal for spot market players - regulations tightened capacity and weather exacerbated it. Add in some relatively strong economic growth and carriers were feeling extremely good. Now? Capacity has loosened. Spot rates are down, so revenues are down. And recently the contract market has taken a cue from the looser capacity, and weakness has been seen in this sector as well. Surcharge revenues are also way down - which impacts revenue (even though it generally has less impact on the bottom line). Put it all together and you end up with a market that isn’t extremely favorable for carriers, nor is terribly bad. Revenues are down across the board and that makes business operations more difficult, but freight levels are stabilizing and capacity-sapping regulations are coming down the pike - either this year or next.”