Recent data from FTR and the American Trucking Associations provide in-depth insight on motor carrier and shipper market outlooks.
By Jeff Berman
August 30, 2017
While I am still getting back into the swing of things after a nice and relaxing late summer vacation, one thing that has largely consumed my re-entry into the real world has been an attempt to get caught up on e-mail. As editors in pretty much all B2B coverage sectors can attest to, this is no easy task to be sure, but it is slowly getting better as the week goes on.
Two e-mails that caught my eye come from highly reputable organizations that provide monthly data that routinely are covered on this web site. Those organizations are FTR, a freight transportation consultancy and the American Trucking Associations (ATA).
Going in reverse chronological order, I will start with FTR’s Shippers Conditions Index (SCI), which it describes as an indicator that sums up all market influences that affect the transport environment for shippers, with a reading above zero being favorable and a reading below zero being unfavorable and a “less-than-ideal environment for shippers.”
For the month of June, which is the most recent month for which data is available, FTR said that the SCI showed a sequential improvement to -0.7 from -1.9 in May, which it said is a near neutral reading. And it added that it expects the SCI to remain mostly moderate in the near-term, due to slow contract pricing gains and a “modest weakening of the expected regulatory environment,” coupled with various data points indicating that the economy is likely to see slower growth over the balance of 2017 in sync with slower freight growth, too. And even though market conditions are neutral, FTR observed that signs continue to point to capacity being tight heading into 2018.
As always, FTR COO Jonathan Starks offered up a succinct analysis of the current state of the over-the-road freight transportation market in his comments within the SCI.
“Weak contract pricing is helping to keep the SCI in relatively neutral conditions,” e said. “However, spot market pricing is approaching 20% y/y increases, and contract increases are only a short time from occurring. More importantly, Hurricane Harvey’s impacts on Texas and other gulf region states is strong enough to affect nearly 10% of the trucking market. That could serve as a catalyst for further capacity constraints and stronger rates as we head into the fall shipping season. In addition, the Electronic Logging Device (ELD) scheduled for December will maintain pressure on truck capacity as we head into 2018. The recent decision from the Commercial Vehicle Safety Alliance (CVSA) to delay full penalties for ELD compliance until April 2018 does reduce some of the near-term pressure, but the overall picture remains the same - trucking capacity is tightening, and rates are moving up.”
It is not hard to see that there are various factors at play that have a direct impact on market conditions, as outlined by FTR. Even though its data is only through June, it also provides a look at the current environment and what may lie ahead, too.
Moving on to the ATA’s monthly truck tonnage index, which was released just over a week ago on August 22, its data also did its typical excellent job of putting volume trends into better perspective in helping to pinpoint what is happening in freight economy as it relates to the macroeconomy in terms of volumes.
The ATA’s advanced seasonally-adjusted (SA) For-Hire Truck Tonnage Index saw a 0.1% gain in July on the heels of a 4.4% June decline, while rising 2.3% annually, ahead of June’s 1.2% annual increase. On a year-to-date basis through July, the SA is up 1.2% compared to the same period in 2016.
The ATA’s other reading, the not seasonally adjusted index, or NSA, which represents the change in tonnage actually hauled by fleets before any seasonal adjustment and the metric ATA says fleets should benchmark their levels with, was down 2.2% from June to July and up 2% annually.
ATA Chief Economist Bob Costello noted in the report that the small increase in tonnage in July is consistent with other mixed economic indicators, including retail sales being up, and lower manufacturing production and housing starts, which he said cumulatively led to what he called a “rather flat month in July for truck tonnage.”
Even though these indices from FTR and ATA focus on different things, they each provide a good look at what is happening on both the freight and general economy side, mixed in with regulatory and national issues as well. These types of data sets help us to get better insight and analysis in a market that sees myriad ebbs and flows. That is what makes them worth following.
About the author
Jeff Berman is Group News Editor for Logistics Management
, Modern Materials Handling
, and Supply Chain Management Review
. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. Contact Jeff Berman