FTR cites flat trucking conditions with an eye on growth as year goes on
Flat conditions were the theme of the recent edition of the Trucking Conditions Index (TCI) issued this week by freight transportation consultancy FTR.
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.
For January, the most recent month for which data is available, the TCI came in at 2.7, which was in line with December’s 2.9 and down from November’s 4.38 and October’s 4.58.
As was the case in December, the numbers from January reflect what FTR described as a low point for trucking conditions in advance of “an expected bounce as 2017 progresses.”
And it added that while the industry feels positive following the election, there are risks related to various economic proposals currently being considered by the new administration and Congress.
“It’s looking like 2017 will be a better year for the trucking industry,” said FTR COO Jonathan Starks in a statement. “This late recovery is consumer driven, which is relatively light on increasing freight demand, but we will see modest growth. More importantly, the industry is really beginning to face up to the costs and changes from ELD implementation. We expect a productivity and capacity hit to the industry, though the effects will be felt differently, with early adopters ahead of the curve. One of the big issues we expect companies to continue to struggle with is the driver situation, with the number of new hires not keeping pace with overall demand for drivers. If capacity doesn’t meet demand, then truckers will be able to raise prices. However, we don’t expect to see that impact until late 2017, or into 2018. We are also closely tracking government policies and actions. The main concern continues to be the possibility of trade wars which could have immediate and detrimental impacts on freight transportation.”
Starks said last month that the ELD implementation scheduled for December could be markedly impacted should the White House or courts significantly curtail or remove it, although he noted that should not be the case, given the long-standing bi-partisan support for transportation safety regulations. And he added that FTR will closely monitor how small carriers begin to implement ELD into their operations over the next 9 to 12 months, and how it is likely to affect changes in carrier capacity and rates.
Even though the market outlook is showing signs of optimism, the freight environment remains in a pattern of largely flat growth, including fluctuating GDP, decent job growth figures, and signs of increased consumer spending.
But these alone have not been consistent enough to translate into sustained economic growth, coupled with excess trucking capacity still being hampered by elevated inventories, which have shown signs of heading down recently.
