FTR’s Trucking Conditions Index sees increase from June to July
FTR said that the July reading reflects a tight capacity environment, increasing spot market rates, as well as an impact on the market this fall and winter as a result of the pending ELD (electronic logging device) regulation for motor carriers.
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The Trucking Conditions Index (TCI), which was issued this week by freight transportation consultancy FTR, showed growth from June to July, the most recent month for which data is available.
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 10 indicating that volumes, prices and margin are in a good range for carriers.
The July TCI reading of 5.75 was ahead of June’s 4.54 but down from both June and May, which were both in the 7.0 range.
And FTR said that the July reading reflects a tight capacity environment, increasing spot market rates, as well as an impact on the market this fall and winter as a result of the pending ELD (electronic logging device) regulation for motor carriers.
Echoing commentary from last month’s report, FTR explained that the TCI has not gone up at a higher rate, due to the fact that it is driven more so by contract market conditions, whereas now the spot market segment is accelerating at a higher level. What’s more, the firm said that spot market data continues to support FTR’s near 100% active utilization index. Contract prices are expected to increase in 2018 as capacity further tightens which will move the Trucking Conditions Index up through the year.
“The combination of multiple hurricanes, strengthening spot market conditions, and the final push towards ELD implementation means trucking is ready to shift into a higher gear,” commented FTR COO Jonathan Starks in a statement. “Fleets are finally starting to talk positively about market conditions after being stuck in a relatively sluggish environment for more than a year. Spot rates were up double-digits versus last year before the hurricanes hit and have surged further since then. When you add in a slightly more robust economy, capacity reductions due to Hurricanes Harvey and Irma, extra freight for storm recovery, and productivity reductions as ELDs are fully implemented; that’s a market which gives fleets a reason to be optimistic as we head towards 2018.”
At last week’s 2017 FTR Transportation Conference in Indianapolis, similar themes like tightening in the truckload market, the ongoing truck driver shortage, the recent hurricanes, and the ELD mandate, all are factoring into market conditions, with the working thesis that contract rates are poised to see significant upward traction in 2018.
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