FTR Trucking Conditions Index set up to finish 2015 strong

The recent freight growth push that was on display in its previous edition appears to have remained intact in the most recent edition of the Trucking Conditions Index (TCI) from freight transportation forecasting firm FTR.

For August, the most recent month for which data is available, the TCI is at 9.53. 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 9.53 reading tops July’s 8.07, and FTR said that it reflects healthy freight growth projections, coupled with positive revisions to first and second quarter economic data boosting FTR’s full-year 2015 freight growth forecast to 4.4 percent.

“While the TCI has moved higher, we are hearing from shippers that the current capacity situation has been better than anticipated as we move through the peak shipping season,” said FTR President Eric Starks in a statement. “Even with capacity utilization easing some, truckers are still able to make money. This is translating into healthy demand for equipment as orders for trailers have remained strong. The strong TCI is in contrast to some economic indicators that suggest the economy is stagnant. Even with the economy painting a mixed picture, trucking conditions are still expected to remain at levels that are healthy through the end of this year.” 

FTR’s analysis matches up well with comments from American Trucking Associations (ATA) Chief Economist Bob Costello at the ATA’s Management Conference & Exhibition last week.

“Right now, we’re in a bit of a soft patch because inventories are higher than one would expect,” Costello said. “Once that normalizes, we should see a healthy rebound in freight volumes.”

At last month’s CSCMP Annual Conference, Rosalyn Wilson, senior business analyst at Parsons, and author of the Council of Supply Chain Management Professionals (CSCMP) Annual State of Logistics (SOL) Report, had a different view on the remained of 2015, explaining that things will be slower as the year ends, but they are still much better when compared to recent years.

“Despite the fact that there are numerous headwinds that we are going to have to face that are not within our control, like the global markets, we certainly do have control of what we are going to do about our inventory or are considering what to do about our inventory,” she said. “I think we still need to see the kind of sustained growth we had last year and this year before we see an increase in rates, but I do think the increases in costs everyone is facing are going to have an effect on decision-making for rates.”