Monday, February 19, 2018

FTR's Trucking Conditions Index falls from October spike to more sustainable level


Monday, January 22, 2018
by LYNDON FINNEY/The Trucker Staff

The Trucking Conditions Index tracks the changes representing five major conditions in the U.S. truck market, including freight volumes, freight rates, fleet capacity, fuel price and financing. (The Trucker: KLINT LOWRY)
The Trucking Conditions Index tracks the changes representing five major conditions in the U.S. truck market, including freight volumes, freight rates, fleet capacity, fuel price and financing. (The Trucker: KLINT LOWRY)

BLOOMINGTON, Ind. — FTR’s Trucking Conditions Index (TCI) for November fell back from the spike measured in October to a more sustainable level with a 5.8 reading, the company reported Monday.

Although there was a significant monthly decline in the index, conditions remained strong for carriers in November, FTR said, adding that it assumed the spike in October would be short-lived and would likely not be maintained at that level.

However, if contract rates are able to sustain their current upward pace, the index in 2018 will be better than the November reading.

Freight demand remains strong but, with utilization figures close to 100 percent, there is not much upside potential to this piece of the index.

Details of the November TCI are found in the January issue of FTR’s Trucking Update, published December 22, 2017.

Jonathan Starks, chief operating officer at FTR, commented, “With utilization levels fairly close to industry limits, further gains in the TCI are likely to come from either more significant pricing gains or additional freight growth,” said Jonathan Starks, chief operating officer at FTR. “We are already seeing the pricing effects take hold with more substantial contract rate gains as spot market pricing surged after the hurricanes and during the holidays. Spot markets actually hit record high rates in the last week of 2017 and are starting 2018 at a significantly elevated level. As we move into 2018, the market is poised to see additional freight growth and further limits on capacity as ELDs are fully enforced beginning April 1. The next critical time frame is the second quarter when truckload activity ramps up and the full ELD enforcement hits. As the recent Polar Vortex weather demonstrated, any modest change in operating conditions can have an oversized impact on carriers and shippers as the industry operates with very limited (if any) excess capacity.”

The Trucking Conditions Index tracks the changes representing five major conditions in the U.S. truck market, including 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 behavior.

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.

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