Tight motor carrier capacity and rate gains continue to remain two of the dominant themes in freight transportation, according to the most recent edition of the Trucking Conditions Index (TCI), which was issued this week by freight transportation consultancy FTR.
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.
For January, the most recent month for which data is available, the TCI was 11.5, which topped December’s 9.2 and was well ahead of of November’s 5.48 and in line with October’s 9.48.
FTR said that the January reading represents upward trajectory reflecting maxed out capacity and the accompanying rate increases being realized by carriers, adding that trucking conditions have been unusually strong in the first quarter with carriers approaching the most favorable environment they have experienced in 14 years.
And it also said that ELD full implementation and strong freight demand will keep the TCI reading in positive double-digits with the peak likely being reached during the second quarter. Looking ahead, expects the TCI to soften later in the year, as increased labor and equipment costs along with slowing rate growth are likely to lead to modest softening of trucking conditions.
“Historically, January and February have proven to be lighter months in terms of the shipping environment, resulting in less truckload demand. That is not the case this year,” said FTR COO Jonathan Starks in a statement. “Truckstop.com’s Market Demand Index is twice the level of January and February 2014, the last time capacity pressures were building up in the system. Carriers continue to hold a dominant position in the market. We continue to see a combination of factors that are keeping the market tight, including the full ELD implementation coming on April 1, as well as a strong run in the economic data month after month relating to Industrial Production, GDP, home building, and sales. One possible effect of the increased freight demand and accelerating rates is that less drivers seem to be leaving trucking due to ELDs than many anticipated. However, we need to wait for enforcement data in May to see if drivers are adopting ELDs, or just running loads without them.“