Trucking market on solid footing early into 2016, says FTR
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Picking up where its previous report left off, the most recent edition of the Trucking Conditions Index (TCI) from freight transportation forecasting firm FTR continues to show that the trucking market continues to be solid.
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.
In December 2015, the most recent month for which data is available, the TCI saw an increase of 2.24 percent to 10.88 for its second straight sizable increase, following a 3.58 percent jump from October to November, which was preceded by a series of declines in prior months.
FTR explained that it expects 2016 to “be a year of placid conditions, with little or no change in the current trend of tight, but adequate capacity,” while cautioning there are things that could have an effect on capacity utilization and also lead to temporary rate gains, including:
-a reinstatement of Hours-of-Service changes; and
-larger-than-expected weather shocks impacting truck productivity
The firm expects truck loadings to see a 3 percent increase in 2016 that it said reflects strong multipliers that are atypical at this point in a recovery, but added these multipliers are likely to be slowed as evidenced by sluggish GDP numbers.
“The trucking environment is still quite healthy,” said FTR COO Jonathan Starks in a statement. “There is no doubt that growth has slowed for certain segments, and there are increasing uncertainties surrounding growth prospects for the U.S. economy. However, contract rates are still rising, albeit slowly, and there is very little capacity that is exiting the system. You can see this in the Truck Failures figures that are reported by Avondale Partners as they sat near historic lows throughout 2015. Falling fuel is clearly helping cash flow for small carriers, but declining spot market rates are negating some of that improvement. Overall, the trucking industry seems to be in a relatively stable environment as we move into 2016.”
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