FTR’s Trucking Conditions Index for May basically remained unchanged from April at a positive reading of 7.01.
FTR notes that the spot rate market is a strong indicator that conditions for trucking companies are on the upswing with active truck utilization at just below 100%. Spot market volumes and pricing have been up year over year for several months, although contract market prices are still weak, before fuel adjustments. The freight environment in 2017 remains strong, although economic conditions are fluctuating enough that freight growth could weaken. If growth does slow, that may mitigate the potential for critical capacity issues with the onset of ELD implementation at the end of the year.
Jonathan Starks, chief operating officer at FTR, commented, “We are now at the beginning of the third quarter of 2017, and spot market pricing is showing solid double-digit increases over last year. It is becoming increasingly clear that the weak pricing in the contract segment cannot be sustained for much longer. In reviewing data from the publicly-traded carriers’ first quarter reports, we have seen that there was no notable reduction in the carriers’ underlying costs. That means that rate increases will need to be forthcoming or margin compression will quickly impact their bottom line. The wildcard continues to be the ELD implementation at the end of this year. Capacity has already tightened, and the market will tighten further as full ELD implementation occurs.”
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 behaviour. A positive score represents good, optimistic conditions. 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….and readings high above zero spell opportunity. Readings near zero are consistent with a neutral operating environment. Double digit readings (both up or down) are warning signs for significant operating changes