Trucking Conditions Index Remains in Carrier-Favourable Environment

 

FTR’s Trucking Conditions Index for March dropped from the previous month of 15.41 to a reading of 10.30. This is, however, not indicative of any fundamental change in the current freight demand climate. Year over year the Trucking Conditions Index remains more than triple the 2017 reading of 2.97. The carrier-favourable environment is not expected to see any real change at least through 2018 with even more positive conditions during the second and third quarter. FTR forecasts conditions for carriers stabilizing at a high level into 2019 as fleets continue to add capacity and the supply-chain adjusts to the ELD regulation.

Jonathan Starks, Chief Intelligence Officer at FTR, commented, “While diesel price increases are a negative for the carriers, the relatively modest uptick in recent fuel costs is more than offset by significant gains in pricing and overall strong demand for transportation. The Market Demand Index published by Truckstop.com and FTR shows that the spot market is once again tightening, rising each of the last four weeks to 58.1 in week 18. It is likely to hit new record highs as we approach the summer shipping season at the end of May.”

Avery Vise, vice president of trucking research added, “The latest data suggests that the capacity crunch has stabilized somewhat following the electronic logging device implementation, but it certainly has not abated. The most recent jobs report serves as a warning that carriers might find adding capacity tougher in the months ahead, an outcome that could help maintain margins but limit revenue opportunities.”

The Trucking Conditions Index tracks the changes representing five major conditions in the U.S. truck market. These conditions are: freight volumes, freight rates, fleet capacity, fuel price, and financing. The individual metrics are combined into a single index that tracks the market conditions that influence fleet behaviour. A positive score represents good, optimistic conditions. Conversely, a negative score represents bad, pessimistic conditions. The index tells you the industry’s health at a glance. In life, running a fever is an indication of a health problem. It may not tell you exactly what’s wrong, but it alerts you to look deeper. Similarly, a reading well below zero on the FTR Trucking Conditions Index warns you of a problem, while readings high above zero spell opportunity. Readings near zero are consistent with a neutral operating environment, and double-digit readings (both up or down) are warning signs for significant operating changes.