FTR Trucking Conditions Index for January is down slightly from December

Data released today by freight transportation consultancy FTR Associates showed that conditions impacting the trucking market in its Trucking Conditions Index (TCI) dipped slightly from December to January.

The TCI, which reflects tightening conditions for hauling capacity and is comprised of various metrics, including capacity, fuel, bankruptcies, cost of capital, and freight, came in at 6.1 in January, which was down slightly from December’s 7.0 and snapped a three-month growth streak.

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 spike in the price of diesel due to Mideast tensions is one factor that has pulled the TCI down recently and downside pressure will continue until the price stabilizes,” said Larry Gross, FTR senior consultant, in a statement. “However, barring a significant economic slowdown from an external factor such as an actual Mideast confrontation, the fundamentals for the trucking industry are expected to continue to strengthen throughout the year, and we could well see a surprise on the upside if important sectors such as automotive and even housing continue to improve.”

While fuel is acting as a wildcard at the moment, carriers are still in a favorable position for rates, due to fairly tight capacity, a limited driver pool, and regulations like CSA and HOS (set to kick in next year) working in tandem to create an environment in which many shippers are chasing the same carriers for freight.

Gross recently noted that even with mild economic growth, overall conditions are likely to be tempered for shippers, adding that if the recent spate of good economic news translates into more robust economic growth, capacity would tighten significantly and greater upward pressure on freight rates will result.

FTR added that even with a slower than expected start with the January TCI it expects a slow climb to positive territory throughout 2012, “with volumes and profits sufficient for investment for growth by year’s end.” The firm also said that the rebounding U.S. economy is expected to produce at least a 3.9 percent gain in truck freight that would top overall GDP performance.