FTR Trucking Conditions Index in May is in line with previous months
July 10, 2013 - LM Editorial
Trucking conditions in May remained in line with April, according to the Trucking Conditions Index (TCI) released today by freight transportation consultancy FTR Associates.
In the TCI report, FTR said its reading for May was 12.4. 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. May represents the fifth straight month that the TCI has been above ten, with March and April coming in at 13.12 and 13.8, respectively.
“The trucking industry has seemingly been stuck in a holding pattern for the last year or so,” said Jonathan Starks, director of transportation analysis for FTR, in a statement. “Rates have only moved slightly higher and freight growth, while strong at the end of 2012 and early in 2013, has generally been modest. Barring an external change in the marketplace we believe that the HOS changes, in conjunction with the other numerous regulations already implemented or soon to be, will be enough to change the supply and demand equation in favor of the truck fleet. That is why we expect a noticeable uptick in rates by the end of the year. The weaker manufacturing sector has probably limited any chances of seeing a true capacity crisis in 2013—we need some additional economic growth to envision that possibility.”
FTR officials have previously said that the TCI includes what they describe as a forward-looking component, which is pushing the TCI level up. And they said that continued moderate growth in conjunction with HOS and other regulations, will cause trucking rates to firm up in the coming months and improve carrier profitability.
Similar thoughts have been echoed throughout the industry in recent months. At last month’s National Shippers Strategic Council (NASSTRAC) Annual Conference, various carriers cited capacity cuts of 3 percent or more due to HOS, coupled with the vast majority of carriers noting they have no plans to increase assets or related equipment, other than on a replacement basis.
FTR Senior Transportation Consultant Larry Gross recently told LM 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 come as a result.
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