The most recent edition of the Trucking Conditions Index (TCI), which was issued this week by freight transportation consultancy FTR, fell to its lowest level in more than a year.
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 October, the most recent month for which data is available, the TCI came in at 7.75, its lowest reading going back to July 2020, and below September’s 11.79 and August’s 11.63. The all-time record reading, for the TCI, is May’s. 16.82, which topped March’s 16.17, the previous all-time high.
FTR attributed October’s decline to what it called a surge in diesel prices, explaining that had fuel prices been a neutral factor, the change in the index from September’s 11.79 reading would have been negligible.
And it added that freight rates remain the largest positive factor, even though they were modestly less positive in October. But it also observed that freight volume and utilization were stronger positive factors than they had been in September, noting that fuel costs have now stabilized, and the TCI outlook is for solidly positive readings well into 2022.
“October was an outlier due to the brief surge in diesel prices, but conditions in 2022 are unlikely to be quite as robust for carriers as they are today,” said Avery Vise, FTR’s vice president of trucking, in a statement. “We expect slower growth in freight volume and a slight easing of capacity utilization resulting in a gradual stabilization of freight rates at an elevated level. Even so, market conditions should favor carriers at least into 2023. Potential downside risks for this outlook include further gains in driver capacity and a sharply reduced consumer spending due to inflation and a loss of stimulus. However, the pent-up demand in the automotive sector could offset any softening due to those factors.”