Trucking Conditions Index Begins Expected Climb
December 12, 2012
FTR Associates' Trucking Conditions Index started to rise significantly in September as expected. It recorded a 65% increase over the August index numbers to a level of 9.6, before giving back some of that gain in October, easing to a reading of 7.9.
The Trucking Conditions Index is a compilation of factors affecting trucking companies. Any reading above zero indicates a positive environment for truckers. Readings above 10 signal that volumes, prices, and margins are likely to be in a solidly favorable range for trucking companies.
FTR forecasts a continued rise in the Trucking Conditions Index until it reaches double digit readings in late spring. The market will be responding to tightening conditions in 2013 with increased capacity utilization caused by solid freight growth and the new hours of service rules now scheduled to take effect in June.
"The big driver affecting the Trucking Conditions Index is a sharp increase in capacity utilization," explains Jonathan Starks, director of transportation analysis for FTR. "Regulations adversely affecting trucking's capacity to haul, especially the new HOS rule in the pipeline for implementation, will cause an ever-tightening condition.
"When we add in the expectation of further freight growth, we can see a possible crisis unfolding in late 2013 where there simply are not enough available hauling hours to meet shipping demands. These conditions put the carrier in the driver's seat, allowing the trucker to choose what freight to haul and at what cost."
However, he notes, "Margins may not be as positively impacted if the driver shortage leads to stronger increases in driver pay."