FTR’s Trucking Conditions Index (TCI) for October, at 9.48, spiked upward from the previous month’s 3.5 reading. A strong economy, combined with pressure from hurricane recovery and the ELD mandate, is creating a very tight market resulting in improved contract rates. Although at a high level, the TCI has further upside potential during the first half of 2018. This will likely be followed by softening in industry conditions in the second half of 2018 due to slower freight growth, albeit still equating to solid conditions for carriers.
Details of the October TCI are found in the December issue of FTR’s Trucking Update, published November 30, 2017. The ‘Notes by the Dashboard Light’ section in the current issue discusses the expectations for a healthy Class 8 equipment market in 2018. Along with the TCI and ‘Notes by the Dashboard Light,’ the Trucking Update includes data and analysis on load volumes, the capacity environment, rates, costs, and the truck driver situation.
Jonathan Starks, Chief Operating Officer at FTR, commented, “The TCI is nearing a double-digit number, which indicates that there are big opportunities for carriers with regard to both rates and the loads they choose to carry. Of course, there are still quite a few ‘ifs’ in the near future. If the economy can continue to grow at around a 3% rate in Q4 and 2018Q1, we will see freight demand maxing out any excess capacity. If the ELD implementation and enforcement stay on track, the spring will bring capacity utilization over 100% and the freight transportation market will be scrambling to align loads and trucks. If severe winter weather comes into play, transportation managers will be facing their toughest year since 2004. Carriers should be prepared for big changes, and big opportunities.”
The Trucking Conditions Index tracks the changes representing six major conditions in the U.S. truck market. These conditions are: freight volumes, freight rates, fleet capacity, fleet bankruptcies, 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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Trucking Update, published monthly, is part of FTR’s Freight Focus series and reports data that directly impacts the activity and profitability of truck fleets. As part of the Trucking Update, FTR forecasts expected trends in this data and the probable short and long-term consequences. For more information on how to subscribe to Trucking Update, or other publications within the Freight Focus series, send an email to email@example.com or call (888) 988-1699 ext. 1.
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