FTR Trucking Conditions Index sees increase but market remains on the soft side

The most recent edition of the Trucking Conditions Index (TCI) from freight transportation forecasting firm FTR is very much in line with its predecessor reports from recent months in that it points to a trucking sector that is feeling the pain of various market takeaways like loose capacity and slow demand, among other things.

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 April, the most recent month for which data is available, the TCI rose from March’s 4.22, which marked an almost 50 percent decline and is the lowest TCI reading since 2011, to 6.2.

While the TCI increased, FTR explained that the market remains in a slowdown, impacted by truck freight growth on the decline, coupled with a modest amount of excessive equipment. And it added that it is calling for a transition to moderate growth closer to the end of 2016, as well as some downside risk, which could further hinder freight flows. As for capacity restraints, the firm said that they are not likely to be driven by freight levels but could be affected by regulations.

“There is enough uncertainty swirling around the trucking markets right now to force a manager or business owner to keep the antacids handy,” said FTR COO Jonathan Starks in a statement. “Spot market rates are still negative, contracts rates are moving in that direction, and freight growth has stalled out for several segments. Luckily, not all of the news is bad. The driver shortage is no longer the immediate concern it once was, and the economy continues to trudge along. I am watching inventory right now because of its quick impact on freight demand. Inventory levels are at highs that we haven’t seen outside of a recession since the turn of the 21st century. Does that mean we are heading into a recession? Perhaps, but not definitively. The other conclusion is that higher inventory is the new norm, and it’s just going to take some time for supply chains to optimize their inventories. That could slow freight growth but wouldn’t put the brakes on truck demand.”