Higher diesel prices and weaker freight volume drive down FTR’s Trucking Conditions Index

The new edition of the Trucking Conditions Index (TCI), which was published this week by freight transportation consultancy FTR, took a major step back, falling further into negative territory.

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 August, the most recent month for which data is available, the TCI reading was -12.54, well below July’s -5.34 reading and June’s -6.29 reading. This now marks the lowest reading going back to November 2022. May came in at May’s -3.75 reading. The April TCI reading was -3.88, faring better than March’s -5.83, which came on the heels of February’s -5.17 reading. This was preceded by January’s -1.71 reading, which came on the heels of December 2022’s -6.1 and November 2022’s -7.94. That was preceded by October 2022’s -11.25, which was its lowest level since the April 2020 all-time low, at -28.66, prior to August 2023.

FTR attributed the drop-off in the August TCI to sharply higher diesel prices and weaker freight volume.  And it added that August’s TCI implies the toughest overall market conditions for carriers since April 2020, although surges in fuel prices tend to hurt small operations disproportionately as they are less likely to benefit from fuel surcharges. With fuel costs stabilizing for now, the outlook is for improved conditions, but FTR does not expect the TCI to turn consistently positive until late 2024, it added.

“Market conditions for trucking companies look solidly negative through the first quarter of next year as we forecast no significant strengthening of capacity utilization or freight rates, and freight demand is stagnant,” said Avery Vise, FTR’s vice president of trucking, in a statement. “A major question is whether consumer spending will remain as strong as it has been in the face of inflation, higher financing costs, and the resumption of debt service of student loan payments. Freight demand is more likely to trail our forecast than to exceed it, so any near-term improvements in market conditions for carriers would likely come from a sharp drop in driver capacity. Small carriers continue to exit the market in high numbers, but aside from the LTL sector, larger carriers so far have absorbed much of that capacity. Diesel price volatility and the lack of any near-term strength in spot rates could accelerate carrier failures and tighten capacity.”